Is the Recession Over?
Todd Hirsch, ATB’s Chief Economist, writing in The Globe and Mail, identifies ten ways Alberta was changed during the 2015-16 recession. Ten Ways Alberta was changed by its 2015-16 recession6-4-17 GM Implicit in the column is that economic growth will turn positive in Alberta this year. According to Hirsch, the ways that Alberta was changed include: redefining attitudes (loss of Alberta’s swagger); reminders of oil dependency; deeper provincial deficits and rising public debts; non-energy sectors gaining traction; rethinking energy towards s renewable energy future; stirring the entrepreneur; out-migration; lost jobs, lost dreams; and falling rents.
I am not sure that I share Mr. Hirsch’s belief that the recession has changed Alberta and residents of Alberta a whole lot. Non-energy exports have not been particularly strong and still represent only one of Alberta’s exports. The NDP’s most recent budget is premised on (the hope of) rising energy prices. Furthermore, the mergers and acquisitions activities in the energy and energy services sector are designed to cull costs from the system. Falling rents are a problem as both Calgary and Edmonton’s office markets are going to see huge vacancy levels not seen for decades. While technically Alberta is likely to emerge from recession in 2017, the economy and the provincial government face an existential crisis as the world moves away from its dependence on fossil fuel and transportation vehicles become more fuel efficient or electric.
John Rose, who is the Chief Economist with the City of Edmonton shared this June 29th powerpoint slides presentation with Albertarecessionwatch.com several weeks ago in responding to a request for a preview of this website. Mr. Rose’s comments are noted below.
I think you need to take a more nuanced approach to recessionary conditions in Alberta both from a regional and industry perspective. Edmonton is not in a recessionary situation and is from an employment growth perspective the second best large metro in Canada. As well several sectors at both provincial and regional level are doing well. You need to emphasis that this is not a broad economic turn down. It is a sector specific – energy – issue that has spread to include closely linked sectors such as manufacturing. Attached is my current briefing on Edmonton. Please feel free to reuse this material.
This area contains articles about employment, inter-provincial migration, GDP growth, business confidence, oil prices, trade, inflation, and other data that highlight past developments and portend future trends.
ATB Financial released its Fourth Quarter Economic Outlook on 2 November [ alberta-economic-outlook-winter20162017] which forecasted the worst of the 2015-16 downturn is behind the provincie’s economy. The outlook calls for a modest improvement next year with real GDP growth of 2.1 per cent. ATB’s forecasters expect oil prices to appraoch $55 U.S. per barrel next year but it will take some time for prices to reach the $70 U.S. per barrel range. New housing is expected to remain weak and less than one-half the prveious cyclical peaks. The unemployment rate is forecast to increase slightly next year even as an outflow of migrants continues.
A TD Economics report released on July 19th paints a dismal outlook for the rest of 2016 in Alberta.