An Alberta economist said when it comes to talking about the economy, it’s important not to allow the lightning rod of one issue to distract from finding answers to the bigger, slow-moving forces over time.
Todd Hirsch, vice-president and chief economist for ATB Financial, gave a presentation on where the economy is heading to a room full of chamber members at the Century Casino Feb. 19. To help illustrate his point, Hirsch referred to the short-term, seemingly smaller issues as ’squirrels’ and the long-term trends as ‘boulders.’
“People get really impassioned about discussing, arguing and debating these little squirrel issues, but it leaves us at the danger of missing the big issues, the big boulder coming at us. If we don’t understand the big issues, we can find ourselves in trouble,” Hirsch said.
For example, large projects like the Trans Mountain pipeline and the Teck Frontier oil sands mine may seem like boulder issues – but they are, in fact, squirrels.
“Are we positioning Canada to be a safe supplier of hydrocarbons, as well as, (providing) less carbon-intense energy solutions?” Hirsch asked the room.
“It needs to be both, and I think Albertans need to understand that. The Trans Mountain pipeline is part of this answer, but it’s not the only answer. We don’t do ourselves any favours as Albertans if we only focus on one project, or one issue.”
The boulders
Hirsch pointed to a few examples of megatrends for Alberta’s economy headed into 2020.
In today’s society, people sometimes fall into the trap of thinking social media can replace face-to-face interactions, and over time, these connections start to erode.
“One of the reasons why we are more disconnected, and the fabric of our community is strained, has to do with this – monetization,” Hirsch said. “We live in a world where you can pay for anything, the problem is this has the potential to pull communities apart and leave people more disconnected than ever.”
Social isolation and social poverty does come at a cost. The economic burden of mental illness in Canada is estimated at $51 billion per year, including health care costs, lost productivity, and reductions in quality of life, according to the Centre for Addiction and Mental Health.
The road to employment and a sustainable income has also changed in the last few decades. The traditional career path no longer looks like a straight road, promising decades of employment with one company, but more like a game of Frogger – two steps forward, one to the right, and forward if you can, all while trying to avoid the pitfalls.
While a straight shot may give the illusion of a stable career, Hirsch argues the so-called ‘gig economy’ offers more solid ground.
“People who are successful at navigating their way through this world will always have a network of acquaintances and professionals up to date,” he said. “The biggest attribute is flexibility, adaptability, always taking advantage of the opportunities as they arise, always avoiding the pitfalls.”
How is Alberta doing?
“Well, no news to anyone in this room, it’s not a fantastic situation in this province," Hirsch said.
When the recession hit four years ago, many Albertans expected a faster return to economic boom times, but instead, things seem to have flatlined heading into 2020.
"The main impediment in 2020 remains the energy industry. A lot of investment is sitting on the sidelines waiting for more certainty around pipelines. But there are a lot of other elements to the energy industry that are now holding you back."
One of the hits to global energy prices is the coronavirus, with oil prices today dropping almost $10 lower than they were at the end of 2019, he said.
While predicting less stability and modest growth in the years ahead, the energy sector cannot remain the province's sole focus. The tourism industry is a bright spot for the economy, and grew to $8.9 billion in 2017, representing a growth of almost five per cent year-over-year.
Smaller-scale local food and beverage specialty products have also been growing due to renewed appreciation for superior quality and the chance to directly benefit a community's economy, Hirsch said.
Green sprouts are emerging in the province's developing tech sector as well, with Hirsch predicting a substantial amount of growth in the next five years. A lot of investment can also be seen in warehousing and transportation facilities, he said.
