ebay clutch bags ATB chief discusses Alberta’s economic outlook
The Leduc Regional Chamber of Commerce hosted its monthly luncheon on Friday, Jan. 12.Held at the RedTail Landing Golf Club, the luncheon feature guest speaker Todd Hirsch, chief economist with ATB Financial. Hirsch gave a presentation entitled Alberta Economic Outlook 2018: Five Trends to Watch.Hirsch talked about how it was time to move the frame of mind from recession to growth. Not to suggest that everyone in the province was doing well and recovering from the recession, but Hirsch explained that statistically 2017 was a rebound year for Alberta.With that being said, Hirsch went into his talk on the five trends to watch concerning Alberta economy in 2018. Discussion points have been edited for length.1) PipelinesHirsch: A lot of Albertans, we become a little bit frustrated [or] anxious by the inability for pipeline companies to build pipelines. The two pipelines that are still in play are the Keystone XL Pipeline to the United States, and the Kinder Morgan Trans Mountain Pipeline from Edmonton to Burnaby. They cleared a series of regulatory hurdles in 2017, but I don know if anyone is naive enough to believe it for hurdles, smooth sailing from here on out I think in 2018 there will be more hurdles and more regulatory barriers, and more opposition to the pipelines. And I have to admit, I don know if I totally disagree with some of the people who are opposing the pipelines. Nonetheless, it is important we build these pipelines because this is not just Alberta industry, this is Canada industry. Getting those messages across to some of the political jurisdictions who are opposing them for very specific reasons, that will remain a challenge and a big issue for Alberta economy in 2018.2) Household debtHirsch: My expectation [is] that the Bank of Canada is going to continue to raise rates gradually through 2018. At the same time, we have record household debt income levels in Canada, and Alberta is the highest of them all. Alberta has traditionally had the highest debt income levels, and that is mostly because of our demographics. We simply have more people in that 25 45 year old age cohort, and they are naturally in that period of life where they are accumulating debt. Mortgage debt, particularly. There are some individuals and households that maybe because of circumstances beyond their control they have accumulated too much debt, and they will be in some trouble once interest rates start to rise. Two years ago if you would have asked me about household debt I would have said it not that great that we at a record level, but I not too panicked about it because the Bank of Canada is nowhere close to raising the interest rates. Now, not only did we see two rate increases last year we expecting more this year. That timeline has sort of run out for people who have taken on far too much debt, and we could start to see some real strains. I wouldn want to say I panicking about it, but I do think we will see certain households in some trouble if they not able to get their debt levels down fairly quickly.3) International tradeHirsch: This week changed everything again with the pronouncements from Donald Trump and the White House that they are prepared to serve six months notice and terminate NAFTA. It will be interesting to watch later this month when the NAFTA negotiations resume, what happens after that point, I have no predictions. I don this [being] a catastrophe for Canada at all, but we don have any assurances or guarantees. It could be that this is America way of flicking Mexico, ungraciously kicking Mexico out of the deal. I don know if too many economists in the United States really believe that Canada is the problem. I think the blame, unfairly I would argue, is really Mexico. Moving aside from just NAFTA, I think the whole NAFTA issue should underscore for us one more time how important it is that Canada make some efforts and diversify our trade. We have the trade agreement in place with Europe, I think that going forward will offer lots of opportunities, especially for western Canadian agriculture. But I also think we need to pay some attention to the Trans Pacific Partnership.4) Oil pricesHirsch: We know from what happened in 2014 when oil prices started to drop, that the tanking of oil prices this was the single economic change in Alberta that threw this province flat on its back for two years. [It] reminded us just how dependent we are, not just on one industry, but one commodity within that industry. It reached a bottom at the beginning of 2016 the question is where is it going to go next. We have to recognize that anything could happen. But I think the likeliest scenario is that West Texas price is going to hang out right around $55 a barrel. It could rise up, it could dip below, there always going to be factors that push it up and down. But actually I don think it benefits Alberta at the moment if oil prices go too high. Yes there would be some immediate relief, but it just kind of sets us up in this province for one more time of going through this rollercoaster. a barrel. It a strong enough price that the industry stabilizes and shows a little bit of growth, but it a low enough price that not for a second can our producers take their eye off cost containment, and always pushing for better efficiencies and better use of technology. [That price] also allows for more of that diversity in the province.5) The changing nature of the workforce in AlbertaHirsch: For a lot of us who grew up in the 70s and 80s, in that 20th century work model, the work model was very simple. What you do is you go to school and study hard, then you get a job that starts Monday morning at 8:30 and it ends Friday at 5 o You get two days off, and you repeat. That was the work world not for every industry, but that was the dominant work model. That was 20th century; 21st century labour markets are shifting very quickly. And for some of us that are still in that generation of the 20th century model, it a bit unnerving to see do you mean it not a permanent job? do you mean it a contract position? Millennials I think are much better equipped to deal with that kind of fluid work world. And in some ways, I think there are benefits to it. If you a millennial and you constantly going from contract to contract you constantly need to be keeping your technical skills up to date, you constantly have to get your network of contacts. [On another note] there was a report a few months ago that suggested I think it was 40 per cent of all existing jobs in Canada will be gone by the year 2030. Actually, it seems plausible. When I look back at it, this is the nature of an evolving economy. We could also say that 40 per cent of jobs in 2030 don exist now. I think we see more change over the next 12 years than we saw maybe over the last 40 years. I think Alberta is very well positioned to thrive in this new work environment, simply because our population is younger and we have an energetic population here.