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U.S. inflation increased less than expected in August, which could see financial markets further reduce the odds of another interest rate increase from the Federal Reserve next month.

The Personal Consumption Expenditures Price Index rose 0.3 per cent last month after a downwardly revised 0.1 per cent gain in July, the Commerce Department’s Bureau of Economic Analysis said on Wednesday.

Economists polled by Reuters had forecast the PCE price index rising 0.4 per cent after a previously reported 0.2 per cent gain in July. In the 12 months through August, PCE inflation advanced 3.4 per cent after increasing by a downwardly revised 3.4 per cent in July.

PCE inflation was previously reported to have increased 3.7 per cent in July on a year-on-year basis. The BEA changed its methodology for calculating prices for software and accessories, portfolio management fees and legal services in the PCE price index. It also revised the inflation data going back to 2021.

Excluding the volatile food and energy components, the PCE Price Index climbed 0.2 per cent over the month after a downwardly revised 0.1 per cent rise in July. The so-called core PCE inflation was previously estimated to have gained 0.2 per cent in July.

Core PCE inflation increased 3.0 per cent year-on-year in August after a downwardly revised 3.0 per cent advance in July. Underlying inflation was initially estimated to have risen 3.3 per cent in the 12 months through July.

The U.Ss central bank tracks the PCE price measures for its 2-per-cent inflation target. The Fed this month raised its benchmark overnight interest rate to the 3.75 per cent-4.00 per cent range, the first rate hike in three years, and flagged further increases in borrowing costs in the months ahead.

The odds of an October rate hike were diminished by New York Fed President John Williams’ comments on Tuesday that he saw “no urgency” for further action. Prior to the inflation data, financial markets priced-in a roughly 51.5 per cent chance of further policy tightening next month down from 70 per cent on Monday, CME’s FedWatch Tool showed.

Higher inflation and borrowing costs could crimp consumer spending. A survey from the Conference Board on Tuesday showed consumer confidence plummeting to a near 12-½-year low in September. There are, however, no signs yet of consumers significantly dialing back.

Consumer spending, which accounts for more than two-thirds of economic activity, surged 0.9 per cent last month after a downwardly revised 0.1 per cent gain in July, the BEA said. Spending was previously estimated to have gained 0.2 per cent in July.

Prime Minister Mark Carney warned that pivoting our economy away from the U.S. would come at a cost to Canadians and the latest numbers show that’s true.

An Organization for Economic Co-operation and Development (OECD) report released last week downgraded Canada’s expected economic growth by 25% for this year and by almost the same amount in 2027 – 23.53% – compared to its last report in June.

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The OECD – representing the world’s 38 major industrialized market economies, including Canada and the U.S. – predicts Canada’s economy will grow by just 0.9% in 2026, down from its June prediction of 1.2%, and by 1.3% in 2027, down from 1.7% in June.

By comparison, it predicts the U.S. economy will grow by 2.2%, or more than double Canada’s 0.9% rate in 2026, and by 2.1%, or 61.5% higher than Canada’s 1.3% rate, in 2027.

In both cases, the OECD’s September numbers increase the predicted growth rate of the U.S. economy compared to June, up by 0.2 percentage points in 2026 and 0.3 percentage points in 2027, compared to declines of 0.3 percentage points in 2026 and 0.4 percentage points in 2027 in Canada.

The numbers reflect the fact that in a trade war between two countries, the country with the larger economy – the U.S. economy is 13 times the size of Canada’s – is better equipped to fight than the smaller one.

The OECD attributes Canada’s slower predicted economic growth to the impact of U.S. tariffs on Canadian exports to the U.S. and continuing uncertainty about the future of the Canada-U.S.-Mexico agreement on trade.

In addition, Canada faces long-standing structural problems in its economy, including low productivity.

On the plus side, the OECD said investments in artificial intelligence are boosting the Canadian economy to some extent, along with high oil prices resulting from the ongoing conflict in the Mideast, because Canada is a net energy exporter.

However the report also says high oil prices are contributing to Canada’s headline inflation rate, predicting it will come in at 2.8% for 2026, up from its June prediction of 2.4%, and 2.5% in 2027, up from 2.0%.

Carney told Canadians, after breaking off talks with the U.S. last month, that accepting U.S. President Donald Trump’s demands in the ongoing trade war the U.S. started would have undermined Canadian sovereignty and been more costly over the long term than his strategy of pivoting to increased trade with other countries and building up Canadian infrastructure.

Raising the OECD numbers in the House of Commons last week, Conservative MP Sandra Cobena said Canada and France were the only two G7 countries that had their economic growth forecasts downgraded in the latest OECD report, while they went up in the five other G7 nations.

She said the major infrastructure projects needed to diversify the Canadian economy are years, if not decades, away from completion when Canadians need help with the cost of living now.

“They (the Liberals) are all talk and no results,” Cobena said during question period.

“This Liberal government announces with urgency, but delivers at a crawl. When will they adopt our Conservative action plan so Canadians can afford to live again?”

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(Released in April by Conservative Leader Pierre Poilievre, the action plan proposes a wide range of tax cuts, scrapping laws passed by the Liberals the Conservatives say impede Canada’s economic growth, and would further streamline the process for approving major infrastructure projects beyond what the Liberals are doing.)

OTTAWA — The Liberal government says it will not try to recover any of the at least $34 million in ineligible funding paid out by the so-called “green slush fund,” saying such efforts would not be in the public interest.

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Industry Minister Mélanie Joly quietly made the revelation in a response tabled last week to questions by Conservative MP Luc Berthold on the now defunct Sustainable Development Technology Canada (SDTC).

SDTC was a scandal-plagued cleantech fund derogatively referred to as the “green slush fund” by Conservative MP. It was dissolved in 2024 by then industry minister François-Philippe Champagne after a scathing report by the Auditor General on the organization.

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In the response, Joly said roughly $34 million was paid out by SDTC to ineligible recipients who applied and performed “in good faith.”

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“Therefore, as a matter of fairness and sound stewardship of public funds, it was determined that further pursuit of recoveries was not likely to be successful, and not in the public interest,” reads the document.

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In a statement, Berthold and colleague Aaron Gunn lambasted the decision, which they said flies in the face of the will of MPs of all political stripes. In 2024, the Commons Public Accounts committee unanimously expressed “extreme concern with the blatant disregard of taxpayer funds” called on the government to recoup them.

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In her 2024 report, Auditor General Karen Hogan found that of the 58 SDTC-funded projects she audited, 10 were ineligible for such funding totalling $59 million.

Furthermore, she found 90 cases where an SDTC board member participated and voted in a discussion about a contract despite being in a conflict of interest.

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Read More

1. Government still redacting, withholding ‘green slush fund’ docs despite Speaker ruling it shouldn’t
2. Former chair of Liberals’ ‘green slush fund’ found to have ‘improperly furthered’ business interests
3. Advertisement 1https://937afc5404dc37fb48aa2f8e4a9dc539.safeframe.googlesyndication.com/safeframe/1-0-45/html/container.html

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Hogan also found the organization had serious governance issues.

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“It’s not always clear that funding decisions made on behalf of Canadian taxpayers were appropriate and justified,” she wrote of SDTC.

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At the time, SDTC leadership only partially agreed with some of the key findings in Hogan’s report. It disagreed with some of her findings on funded project eligibility.

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The report not only led to the dissolution of SDTC (whose activities were folded into the National Research Council), it also sparked multiple parliamentary committee studies, a call by Conservatives for an RCMP investigation and a months-long logjam in the House of Commons over access to documents.

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Joly’s response tabled last week sheds new light on what happened to SDTC after Hogan’s report.

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It reveals that SDTC decided to conduct its own review of 158 projects it funded, including those audited by Hogan. The review included “three independent third-parties,” which are not identified.

Despite reviewing three times more projects than Hogan, the foundation concluded that only five (compared to Hogan’s 10) were ineligible for the funding they received.

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Those projects received $34 million in total funding from SDTC since 2017. The document does not identify them and a spokesperson for Innovation, Science and Economic Development Canada declined to do so.

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Joly’s response said the review found the five funding recipients negotiated and performed “in good faith,” suggesting blame for the error lied entirely with SDTC.

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In a statement, ISED spokesperson Alison Reilander explained that a new SDTC board appointed after Hogan’s audit launched an “enhanced process” to re-evaluate funding recipients’ eligibility. She also noted that the auditor general’s office “did not examine the technological merits of the projects.”

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“The enhanced review included a detailed reassessment of all the projects, supported by independent third-party reviewers,” said Reilander.

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“As a result of the enhanced review process, five projects were determined to be ineligible for funding under the terms of SDTC’s contribution agreement with the Crown and one project was found to have been awarded funding to support certain ineligible costs.”

In a separate statement, Hogan’s office declined to comment on the results of SDTC’s eligibility review.

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“To maintain our independence, we do not comment on the government’s policy decisions or provide opinions or assessments on matters beyond the information contained in our published audit reports,” wrote spokesperson Jayita Phulsunge.

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National Post

Employees at the Hamilton steel plant run by Stelco Holdings Inc. will be laid off as the company plans to idle its finishing operations in the city.

Stelco said in a statement to Global News on Monday it was concentrating steel production at its Lake Erie Works plant in Haldimand, Ont.

The company said job opportunities at the Haldimand plant will be offered to laid off Hamilton workers.

“We expect that a significant number of employees affected by the infinite idle at Hamilton should be absorbed at Lake Erie Works,” the company said in a statement.

United Steelworkers Local 1005, which represents workers at the plant, told Global News it was told by the company that U.S. tariffs on steel, plus the lack of steel imports from other countries were behind the layoffs.

The union said the company informed it that about 500 production staff will be laid off. Union local president Ron Wells believes job losses will be closer to 350.

Wells said in an interview the company told the union that operations in the cold-mill and coated departments would be affected.

“It’s extremely devastating,” Wells said.

U.S. President Donald Trump levied tariffs on steel products from Canada of up to 50 per cent under its Section 232 duties about a year-and-a-half ago, with other products like aluminum and autos also facing tariffs.

Wells said that Stelco was citing the price for coated products was “very low” due to the ongoing tariffs.

“So they’re telling us they can’t make money in the current conditions,” he said.

Total tonnage of steel produced won’t be affected, according to Stelco, but there would be a change in product mix “with a higher concentration of hot rolled steel products.”

The counter-tariffs Prime Minister Mark Carney’s government has put in place, as well as the quotas on steel from foreign countries, aren’t “strong enough,” Wells said.

U.S.-based Cleveland-Cliffs Inc. acquired Stelco in 2024.

The office of federal Industry Minister Melanie Joly said in a statement the government would use “every lever possible” to defend Canadian industry, protect jobs and secure the supply chain.

For some time, our government has made clear to the company that we are ready and willing to provide financial support to sustain operations and protect jobs,” the statement said. “Its decision to reject these practical proposals and continue with layoffs is extremely disappointing.”

Ontario Economic Development Minister Vic Fedeli also expressed concern for workers at the Hamilton plant.

“This is certainly a significant blow to the hardworking men and women who showed up there this morning for work to find that news,” Fedeli said.

Hamilton East-Stoney Creek MP Ned Kuruc called the news “devastating.”

“Layoffs of 350 Hamilton steelworkers has been announced and will have a serious impact on workers, their families, and our entire community,” Kuruc wrote on X. “Hamilton is being hit hard by this ongoing trade dispute.”

Conservative Leader Pierre Poilievre also criticized the decision and called on Carney to take further action.

“The Prime Minister needs to turn his rhetoric into reality and deliver for steelworkers who cannot fill their gas tanks with signing ceremonies or pay their mortgages in speeches,” he wrote on X.

President Donald Trump on Monday announced a plan for a $15 billion steel mill in Iowa.

“This steel will be mined, melted and made right here in the USA, which is something very unusual,” Trump said in the Oval Office, where he was joined by Commerce Secretary Howard Lutnick; Joe Broking, the CEO of the company building the plant; and other business leaders.

Mesabi Metallics is constructing the plant with the aim of starting production by 2030, a White House official said. The facility is expected to produce 10 million tons of steel a year and create as many as 1,750 permanent jobs in the state, the official said.

The plant will be capable of supporting defense sector requirements for high-grade steel, the official said.

The president said the plant will “produce some of the highest quality, most affordable steel anywhere in the world.”

The Wall Street Journal was first to report on the new facility.

The announcement comes weeks ahead of the 2026 midterm elections, with Iowa in the center of the fight for the Senate and the House. Democrats are also challenging for the governorship after 16 years of uninterrupted Republican control of the state’s top office.

The plant will use iron ore from a new mine that the company invested $2.5 billion to build in Minnesota. The mine, which will come online in the coming weeks, will produce about 7.5 million tons of iron per year and create about 350 jobs in the state, the White House official said.

The mine is based in Minnesota’s Mesabi Iron Range, which stretches 80 to 100 miles and contributed about 60% of total iron ore production in the U.S. during the 20th century, according to the U.S. Geological Survey.

“It’s the first new iron ore mine in the United States in more than 50 years,” Trump said.

The Export-Import Bank, the federal government’s export credit agency, will issue up to $10 billion in financing for Mesabi Metallics’ expansion there, an agency release said.

Trump has prioritized expanding the U.S. manufacturing sector, including by taking aim at steel imports as part of a wide-ranging trade policy. Although the Supreme Court this year struck down many of the tariffs he imposed, it did leave duties in place on imported steel and aluminum. The U.S. levies a 50% tariff on most steel imports.

Trump on Monday touted his efforts to try to reinvigorate the industry.

“Soon after my inauguration, I imposed powerful 50% tariffs on all foreign steel, and now our steel industry is roaring back to life,” he said. “Everyone’s building their plant here because they don’t want to pay tariffs.”

In a letter last week, steel industry groups urged Trump to “stand firm against efforts to weaken the tariffs” as U.S. steelmakers invest in new mills domestically.

“Weakening the tariffs now would put that progress at risk, threatening American jobs and the economic and national security benefits the policy was designed to protect,” they warned

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  A U.S ban on imports of various Canadian goods, including many alcoholic beverages and dairy products, came into force on Tuesday.
• President Trump said he expects Ottawa to capitulate in the countries’ trade dispute, as Canadian officials insist they will not sign a deal that is bad for the country.
• No escalation has been announced since Sept. 9, and officials from both sides continue to engage in discussions over tariffs which are hurting many small businesses.

The White House banned imports of some Canadian vehicles, dairy and alcohol products on Tuesday, as officials sent mixed signals on the prospect of a trade deal.

The long list of impacted goods includes motorcycles and mopeds with petrol engines larger than 800cc, whey products and molasses, and a slew of alcoholic beverages — mainly those packaged for direct consumption — from beer and cider to wine, whiskey and vodka.

The products are estimated to total around $19.9 billion of Canadian imports by the American Action Forum.

The import ban, announced earlier this month by the Trump administration, is the latest step in a war of words — and tit-for-tat tariffs — between the U.S. and Canada.

President Donald Trump said on Monday he expected a “fair deal” with Canada within the coming weeks, but continued to strike a combative tone.

“They take advantage of us, they feel entitled … there’s nothing they have that we need,” Trump told reporters in the Oval Office.

“I think what’s going to happen is over the next three to four weeks they’re going to come to us and they’re going to say, ‘We’re going to get rid of all the tariffs.’ We’re going to win everything,” Trump said.

However, officials suggest little progress towards a deal.

U.S. Trade Representative Jamieson Greer told CNBC on Friday that there was “no urgency on our side” to strike an agreement and noted that the U.S. still had “a lot of other trade” with Canada.

“We’re still getting what we need from them in terms of oil, gas, potash, all of these things … so there’s still a lot of strong trade between the two countries,” Greer said.

‘We’re not waiting by the phone’

Canadian Trade Minister Dominic LeBlanc told a press conference on Friday that the U.S. was “imposing illegal and unjustified tariffs on sectors of our economy that are causing considerable hardship to businesses and workers across the country.”

LeBlanc said the countries were “talking about trying to find alternatives to the current circumstances” but that they were “not going to sign a deal that’s bad for Canada.”

“We have said we will sign an agreement when we think there is one that is in the interests of Canada’s sovereignty and Canada’s economy… but we’re not waiting by the phone,” LeBlanc said.

Ottawa has stopped short of unveiling fresh retaliation since the Sept. 9 announcement of a dairy and alcohol import ban.

Canadian Prime Minister Mark Carney has meanwhile spent the month courting closer ties with the European Union as relations with the U.S. fray, suggesting in a recent speech that the White House is “weaponizing” economic policy as a form of “coercion” on other nations.

Canada has imposed tariffs ranging from 15% to 50% on CA$27.6 billion worth of a slew of U.S. goods, including steel, dairy, agricultural equipment, paper, household appliances, furniture, clothing and electronics.

It said these were a “dollar for dollar” response to Washington’s 50% tariffs on goods including cement, wine, hockey sticks and more, imposed in August.

The measures target a relatively small portion of the annual $715.5 billion trade in goods between the countries, but continued escalation or a prolonged stand-off are expected to significantly impact sectors such as metals and autos, and hurt small and medium-sized businesses on both sides of the border.

The Bank of Canada warned this month that new tariffs had made the country’s growth prospects more uncertain and increased upside risks to inflation.

• The Conference Board’s Consumer Confidence Index slid in September as respondents cited rising concerns over inflation as well as uncertainty over labor market conditions.
• Prices are at the top of consumers’ minds, with more respondents saying their personal finances were bad as opposed to good.
• Elsewhere, job openings declined in August, though hires nudged higher and layoffs slipped.

https://www.cnbc.com/2026/09/29/consumer-optimism-slides-sharply-as-fears-escalate-over-rising-prices-and-jobs.html

Advanced Micro Devices AMD-T +1.34%increase said on Monday it would acquire Fei-Fei Li’s AI startup World Labs in an all-stock deal valued at US$8.2-billion, giving the chipmaker deeper access to research on AI systems that can understand and simulate the physical world.

The deal gives AMD a foothold in AI-model research as the industry moves beyond chatbots toward systems that can reason about, simulate and interact with the physical world, helping the chipmaker tailor its infrastructure to those emerging workloads.

San Francisco-based World Labs, which raised US$1-billion in a funding round earlier this year, develops spatial-intelligence models that can generate, reconstruct and simulate interactive three-dimensional environments from text, image and video inputs.

The technology is aimed at helping AI systems better understand and reason about the physical world, with potential uses in robotics, simulation, design and other real-world applications.

The startup also develops technology for robotic learning and simulation. Spatial intelligence differs from AI systems focused primarily on language or two-dimensional images by seeking to model how objects, spaces and actions work in a three-dimensional environment.

AMD said it expects World Labs’ research to provide deeper insight into emerging AI workloads and help guide its technology roadmaps across hardware, software and systems.

Li, a prominent AI researcher known for her work in computer vision, will join AMD as executive vice president and chief scientist after the transaction closes. She will report to CEO Lisa Su. The deal is expected to close by the end of 2026.

Statistics Canada said gross domestic product growth was essentially unchanged in July, coming down from a strong second quarter for the economy.

The agency said the result came despite a 1.3-per-cent gain for the construction sector in July, which marked its fourth consecutive month of growth after declines in late 2025 and early 2026.

Non-residential building construction saw its best month since the start of 2022, Statscan said, owing primarily to activity around a new hospital building in Toronto.

Statscan also said a 1.7-per-cent surge in electricity generation, transmission and distribution powered the utilities sector to its strongest month of growth all year. A July heat wave across many parts of the country drove up power demands for cooling, the agency said.

On the other side, declines in July were spread across manufacturing, mining, quarrying and oil and gas extraction, as well as retail and wholesale trade.

Trump expects Canada to cave in trade war as Stelco cites tariffs for layoffs

Manufacturing’s 0.9-per-cent decrease was the sector’s first drop in four months, Statscan said.

Mining and quarrying took a sharp hit in July, thanks in part to a 6.4-per-cent drop in potash mining – the largest monthly decline since September, 2025. July’s increase in oil sands extraction tempered wider declines in oil and gas.

Retailing activity meanwhile fell off at gas stations in July, which Statscan said coincided with rapidly rising gasoline prices in the peak summer travel season.

Estimates for flat growth to start the third quarter come after Statscan projected an annualized growth rate of 3.3 per cent in the second quarter.

Newly revised data showed GDP was actually up 0.4 per cent in June, compared with earlier estimates of 0.3 per cent.

Statcan’s initial estimates call for the economy to pick back up with a gain of 0.2 per cent in August, but those early figures will be revised next month.

The agency said mining, quarrying and retail trade rebounded in the month, offset by further declines in oil and gas extraction.

The August GDP figures will partially capture the impact of new 50-per-cent U.S. tariffs applied on a range of Canadian goods starting Aug. 22.

“The August pickup reinforces our view that the Canadian economy was enjoying a decent mid-year recovery before the latest U.S. tariffs took effect,” said Peter Shannon, senior economist at KPMG, in a note.

Shannon said he expects the bite from the new U.S. duties to meaningfully hit in September and take full effect in the fourth quarter. KPMG projects GDP will be about half a percentage point lower over the course of a year should the tariffs remain in effect.

Uncertainty from U.S. trade policy could halve fourth-quarter growth, Macklem says

Benjamin Reitzes, BMO’s managing director of Canadian rates and macro strategist, said in a note to clients Tuesday that the August advance has him tracking GDP growth of 1.5 to 2 per cent in the third quarter of the year. That’s roughly in line with the Bank of Canada’s forecast for 1.5 per cent in the quarter, he noted.

New tariffs create some roadblocks for the economy, but Reitzes said fiscal policy changes like Ottawa’s move to expand investment incentives will help support growth.

“The Canadian economy continues to hang in there despite the ongoing trade headwinds,” Reitzes said.

The Bank of Canada will get a look at new jobs and inflation data for September, as well as a read of its own quarterly surveys of businesses and consumers, before making its next interest rate announcement on Oct. 28.

Reitzes suggested these data prints will be more impactful for the central bank’s decision than the July GDP release.