Alberta's economy is improving, just not at whiplash pace

Boom-bust-slow-but-steady recovery?

According to ATB Financial's latest economic update, Alberta is facing something unusual: a bounce back from a bust that doesn't cause whiplash. 

The institution's financial forecast is "calling for real GDP growth of 2.7 per cent this year and 2.3 per cent in 2019."

The report, released on Tuesday, is careful to mention that both reality and perception are important in discussing the state of the economy. It says that despite positive signs, sentiment for many remains mired in the downturn. 

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It also notes caution when celebrating the recovery, with unemployment and lower pay remaining a concern, as well as trepidation over the great pipeline debate of 2017-2018.

"There hasn't been a whole lot that has change since our February update. So in some ways it's sort of steady as she goes, there's not a lot in our forecast that's new," said Todd Hirsch, ATB's chief economist.

"We thought we might have more resolution on both the pipeline and on NAFTA by now, but, of course, we do not."

He says that uncertainty, particularly on pipelines, has left everything in a sort of limbo. 

Perception vs. data

The report notes that interprovincial migration is expected to sway back in Alberta's favour this year, oil prices are rising, employment is growing — and forecast to continue growing — and that residential building permits are stable. 

Yet grumblings about the economy continue. 

Hirsch said one reason why perception is not lining up with the data is because the economy is changing. 

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"What we're not seeing, though, is the job market just recovering or rebounding to what it looked like in 2014, especially in the energy sector," he said. 

"So there are jobs coming back to the energy sector, but they tend to be not those really high quality, high paying ones that we saw, the downtown Calgary kind of office professionals."

Although the unemployment rate across the province has dropped from a high of about nine per cent to a current rate of 6.6 per cent, it remains higher in Calgary at eight per cent. 

Hirsch notes that the jobs that are returning are full time and in the private sector.

A new economy

Hirsch says new sectors are emerging from the downturn stronger than before, able to finally compete with oil and gas to attract and retain talented workers. 

He points to transportation and logistics, agri-foods, tourism and technology as new bright lights on the provincial scene.

While Hirsch notes that not all skills are easily transferrable, workers from the energy sector should look to new opportunities in other areas of the economy. 

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And Albertans in general have to readjust their thinking away from the boom-bust cycle that has dominated the province for a century.

"If people are just expecting and waiting for us to return to June of 2014, I think those are the ones that are going to be disappointed," said Hirsch. 

"The ones that are looking forward to a changing and evolving economy and one more suited to diversity, I think those are the ones that are going to be happier."

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