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Investors should keep their guard up amid today’s economic headwinds, according to Corrado Tiralongo, Chief Investment Officer at Canada Life Investment Management. Speaking on the Soundbites podcast this week, he warned that Canada’s economy remains fragile — with a cooling housing market, soft exports, and rising unemployment.

“It’s a fragile time,” Tiralongo said. “We’ve long expected Canada to slip into a mild recession, and that’s exactly where we appear to be heading.”

Although household spending has continued, he believes the momentum is temporary.
“Economic growth turned negative in the spring and has struggled to regain traction,” he added.

Gradual Rate Cuts, Not Aggressive Moves

Tiralongo expects the Bank of Canada to trim interest rates twice more this year.
“Inflation has eased and tariffs have been rolled back, giving policymakers room to act,” he said. “But we don’t see a dramatic easing cycle — the path will likely be steady and measured. If the slowdown deepens, however, the central bank will need to move further.”

He forecasts Canada’s GDP growth to remain below 1% next year, with unemployment peaking near 7.5%. “Rate cuts will provide some support but won’t fully offset weak exports and sluggish business investment,” he noted.

Contrasting U.S. Resilience

In the U.S., the picture is more upbeat. GDP is still expanding, and consumer spending remains firm. “Personal income, retail sales, and production are trending in the right direction,” he said. While job growth has cooled slightly, Tiralongo does not expect slower hiring to immediately dent consumption.

“Our base case is that the U.S. avoids a recession,” he stated. “We project the S&P 500 to reach around 6,750 by the end of 2025 and 7,250 by 2026, supported by resilient earnings and continued enthusiasm for artificial intelligence. There are risks — particularly if the AI boom disappoints — but big tech remains robust for now.”

Opportunities Beyond North America

While Canada, Europe, and the U.K. appear vulnerable, Tiralongo pointed to potential openings in non-U.S. equities, especially Asian exporters that are benefiting as companies reroute global supply chains to avoid trade barriers.

“These markets can serve as useful diversifiers for investors looking to reduce reliance on U.S. tech,” he said.

The Bottom Line: Avoid Overexposure to Risk

Despite cooling inflation and the prospect of rate cuts, Tiralongo emphasized that global growth will likely stay subdued.

“We don’t see a dire scenario,” he concluded, “but growth is slowing — and investors should avoid doubling down on risk.”