The recession that went away - Alberta’s economy in 2019
Revised numbers show that Alberta’s economy grew by (a rather modest) 0.1% last year whereas earlier estimates had provincial output shrinking by 0.6%
By ATB Economics 10 November 2020 1 min read
As Canadians, we are fortunate to have a national statistical agency that produces high quality economic data. At the same time, it’s always a good idea to remind ourselves that almost all economic statistics are estimates.
From the unemployment rate and average income to retail sales and gross domestic product, most of the statistics we use to get a sense of what’s happening in the economy are based on surveys that are subject to error. And because timeliness is critical, information can flow in later that requires the estimates to be revised.
Estimates of gross domestic product (GDP) are a case in point. Revised numbers released by Statistics Canada yesterday show that Alberta’s economy grew by (a rather modest) 0.1 per cent last year. Earlier estimates, however, had provincial output shrinking by 0.6 per cent.
On the one hand, this is no big deal. The estimates are close (revisions like this are usually in the same ballpark as the original numbers) and we shouldn’t quibble too much about tenths of a percentage point.
On the other hand, we shouldn’t be too loosey goosey either. While it’s important to recognize that the situation on the ground might differ from the estimates, they are usually the most accurate and most consistent way we have to measure what’s going on out there.
Often it’s the direction the numbers point to—up versus down, expansion versus contraction, higher versus lower—that is what matters. In this respect, tenths of a percentage point are important and can add up to thousands of real people or billions of actual economic activity.
Returning to the example of Alberta’s revised GDP estimate for last year: At -0.6 per cent, we were referring to 2019 as a recession.
With COVID turning things upside down in 2020, it might seem moot, but let the record show that 2019 was a very slow year for the Alberta economy but not, technically at least, a recession.