Small economic upticks demonstrate Albertans’ grit and resilience
By Alison Gates 18 March 2021 3 min read
As Albertans look forward to longer days and sunnier skies, Alberta’s economy is also showing signs that allow for cautious optimism.
“Many Albertans are still living with the financial and personal pressures brought on by the global pandemic,” said Todd Hirsch, Vice-President and Chief Economist at ATB. “The positive takeaway from this economic outlook is that there are glimmers of hope on the horizon.”
With vaccines rolling out across the province, ATB’s Economic Outlook forecasts the economy will make up a large portion of the ground it lost last year due to the pandemic and oil price crash. The forecast assumes that COVID-19 will be largely quelled in Canada by Fall 2021 and that a staged reopening of the provincial economy will happen between now and then.
ATB predicts a K-shaped recovery in Alberta. Higher-income earners who remain employed, representing the upper branch, will return to normal (or a new normal) and drive consumer spending. Lower-income earners on the bottom branch of the K may face chronic unemployment and feel the strain of emergency government relief programs ending.
While the number of total business closures and jobs lost in the past year is still unknown, there is an estimated employment growth of nearly four per cent in 2021.
“We’re likely not going to see the unemployment rate rise above pre-pandemic level, but this is an incremental move in the right direction,” Hirsch remarked.
Oil and gas
Similarly, according to Statistics Canada, we can expect capital spending in the oil and gas sector to rise marginally, with an anticipated three per cent increase over last year. An increased demand from oil and gas operations and Alberta power plants, as well as infrastructure improvements and stronger prices also bode well for Alberta’s natural gas industry this year.
Construction and real estate
Spending on residential construction (housing starts and building permits), perhaps surprisingly, went up in 2020 and through January 2021. However, interprovincial border closures have slowed population growth, which means housing construction will likely remain in a holding pattern for the foreseeable future.
The resale housing market, on the other hand, saw momentum build in the second half of 2020—both in the number of sales and in pricing—and this momentum is expected to continue.
“Improvements in Alberta’s economic situation should activate some growth in commercial construction this year, but there was a significant supply of vacant space even before the pandemic,” said Hirsch. “With a large percent of the population that would typically occupy these spaces now working from home, it’s hard to predict what the future holds for this sector.”
When it comes to retail spending, Albertans stepped up to the plate. Without vehicle and gas sales factored in, this sector increased by upwards of three per cent. Households that accumulated savings during the lockdown restrictions should help bolster retail sales this year; however, this may be offset by the end of emergency income support and ongoing unemployment.
Hirsch reflected, “Since the pandemic began a year ago, ATB has been committed to using our channels and energy to encourage Albertans to shop local. We’ve been consistently amazed at how people have responded and their efforts to keep local businesses in business.”
The provincial announcement of an $815 million upgrade to Alberta’s irrigation system was welcome news to farmers across the province, who, despite the announcement, remain concerned about the lack of winter precipitation and the impact it has on spring seeding.
“I’m guessing the increased interest in home baking may have had something to do with it,” joked Hirsch. “But the agricultural sector had a strong past year and should continue to thrive in 2021. Agriculture has always been a cornerstone of Alberta’s economy; we’re happy to see it come through so well.”
Built to help Alberta
“We don’t know exactly what the next year will bring, but we do know that the people of this province are made out of tough stuff...they always have been,” Hirsch remarked. “And ATB is committed to being there for Albertans just like we’ve been there for 83 years. We’re in this for the long run and feel positive about what the future holds.”