While AI capex stays hot, Eric Lascelles outlines why USMCA negotiations, fiscal policy and trade remains risky
If you were to ask Eric Lascelles what he expects to stem out of 2026, the managing director and chief economist at RBC Global Asset Management believes the year ahead should be better than the one that’s just been left behind.
“We are hoping and expecting that 2026 will be a somewhat improved year economically. And that's a statement that I can make, with some conviction for Canada, but we're hopeful also global growth and US growth is somewhat faster as well," he said. "2025 was an inflection year, a tumultuous year, and we had this big change in trade philosophy, I suppose, among other things… There could be some choppiness early in [2026] but we're in a position to see perhaps more normal conditions begin to prevail over the span of 2026.”
Yet, Lascelles acknowledged that recent data have made the US economy, and to a lesser extent Canada’s, unusually hard to read. Traditional headline job-creation figures look weak in the US, but he sees that as partly a function of stalled population growth and near‑zero immigration rather than outright economic collapse.
In his view, that means labour-market health is better gauged right now through unemployment rates, which have edged higher but remain comparatively low. Because of this distortion, he says his team has been shifting the toolkit they use to interpret the cycle particularly as last year’s US government shutdown wiped out some official data and left permanent gaps.
As a result, they have leaned more on alternative metrics, such as private payroll reports and business surveys. He thinks the statistical picture should clean up in 2026, assuming the US government avoids another shutdown.
Alongside labour indicators, he is watching global trade flows closely as the tariff shock works through the system. Despite the political noise and a reduced US role at the centre of global trade, he notes that overall trade volumes are still growing at a roughly normal pace, with other countries making “interesting and useful connections elsewhere, which is quite a positive thing,” noted Lascelles.
He also stressed the signalling value of markets, noting that equity performance and, especially, credit spreads are part of his dashboard for judging the underlying economy. Right now, he sees credit markets as broadly healthy, underscoring that spreads are tight, which caps upside for investors but typically points to ongoing stability. He acknowledged there remains pockets of stress in US household credit and some areas of private credit, but emphasized it still gives “the appearance of a pretty healthy market,” he said.
USMCA trade negotiations also remain top of mind for Lascelles and his team.
"We will be watching USMCA negotiations with great interest, obviously, to assess whether Canada can strike a reasonable deal," he noted, adding his base case assumes the agreement survives largely intact, perhaps with some added provisions reflecting sector-specific tariffs that are likely to persist.
But while he doesn’t expect the deal to be scrapped or Canadian tariff rates to spike dramatically, he acknowledged there’s likely to be “some fairly stressful moments along the way.”
“In fact, we even saw the White House threatening recently to tear up the USMCA. I don't think that's genuinely on the table, but I fully expect all sorts of leverage to be able to hide Canada and Mexico in a way that renders it quite important for the Canadian outlook in any event," he said.
Yet, Lascelles underscored that the outlook isn’t all positive as there are notable risks for investors to be mindful of. For example, he emphasized investors may be underestimating the “mild hit from tariffs”. He believes major shocks often hit with a long delay, pointing to previous interest rate hikes in 2022 and the pandemic, underscoring something similar could be happening with tariffs, which raises the risk of stickier inflation ahead.
He also points to unchecked fiscal policy, noting many governments are running large deficits with few constraints, and bond markets are already showing some pushback through steeper yield curves and higher term premiums.
“There is a little bit of a punishment being doled out for that but there is a chance the punishment gets bigger yet,” he said.
AI also remains a big driver for the RBC GAM team as Lascelles sees AI affecting the economy through several powerful channels.
First, he notes that the surge in mega‑cap tech valuations is creating real wealth effects, especially for higher‑income households who own those stocks, and that this is feeding into consumer spending at the top end.
While he acknowledges that his main scenario is constructive, with ongoing capex and productivity gains, he also doesn't rule out the possibility that the sector has bubble-like characteristics. He believes the sheer scale of spending raises the risk of capital being misallocated. If companies suddenly conclude the returns are not there, that could hit both equity markets and investment spending.
Even in a bubble scenario, he notes, the underlying infrastructure and technological progress could still leave the broader economy better off, cautioning that there is a genuine risk AI fails to remain the powerful growth engine it has recently been.
Still, he acknowledged that AI-related capital expenditure will be a key macro driver this year particularly as AI capex was a major engine of US growth last year and Lascelles expects this to continue rising in 2026, even if the growth rate slows from 2025’s extreme pace.
But the real economic payoff from AI will come through productivity, notes Lascelles. He said the large investments in models, data centres and computing capacity are being made on the assumption that they will generate broad efficiency gains across sectors and geographies, not just for a handful of dominant US and Chinese tech firms.
“There's a reasonable consensus that, yes, there will be productivity gains that emerge from these technologies. There are bottom-up microeconomic type studies suggesting that there are gains and efficiencies being obtained. We've probably already seen productivity growth in the US moving a little faster than normal in recent years. We are hopeful that another tailwind, for 2026, is that we start to see the real fruit of AI, which is the productivity gains,” noted Lascelles.
