Todd Hirsch is the Calgary-based chief economist of ATB Financial, and author of the forthcoming book, Spiders in Space: Successfully Adapting to Unwanted Change, to be released April 20, 2017.
It may not feel like it, especially for the unemployed. But by most measures, Alberta's recession of 2015-16 is starting to lift. Business confidence is slowly returning and forecasters are expecting modest economic expansion this year.
It was a nasty downturn, one that will leave a scar on the province for years. Here are the 10 ways in which Alberta has been changed by the recession:
Empty offices. The description of downtown Calgary as a "ghost town" is an exaggeration. There are still line-ups at coffee shops and rush-hour remains something to avoid. But the shiny office towers that were once iconic of corporate power and wealth are close to 30-per-cent vacant. It will take years for it all to be absorbed.
Reminders of oil dependency. Albertans have a love-hate relationship with the petroleum sector – heavy on the love – but there can also be frustration and disappointment with it as well. Dependence on the price of oil has been underscored by the recession.
Lost jobs, lost dreams. Alberta went from enjoying the lowest unemployment rate in the country to having one of the highest. As pink slips were flying in 2015, the hopes and aspirations of thousands of workers were dashed – at least temporarily. Jobs will slowly start coming back this year, but it may be a few years until the unemployment rate drops back to 4 per cent.
Out-migration. It's not unusual for Alberta to see net out-migration to other provinces during a recession, and 2015-16 was no exception. Still, compared to the recession of the 1980s, the volume of people leaving has been a trickle.
Deeper in debt. After having paid off its debt in 2005, Alberta's government has plunged solidly back into the red. The deficits started nearly a decade ago, even when oil prices were at $100 (U.S.) a barrel. But as prices slumped to $30, the deficit treadmill picked up speed.
Yet while the recession has harmed the province in these ways, there are other changes that have actually made Alberta a better place:
Stirring the entrepreneur. Alberta has always been a "roll-up-the-sleeves" kind of place that rewards the self-starter. When petroleum companies can offer eye-popping paycheques and every second Friday off, many would-be entrepreneurs are drawn into the beige cubicles of corporate work. With the recession, the seeds of entrepreneurial energy are sprouting and creating new opportunities.
Rent is falling. During the boom years, the cost of renting made it difficult to live, especially for those on fixed or low incomes. That's reversing. The price of rental accommodation is falling as a glut of apartments and condominiums have pushed up supply. And the out-migration to other provinces has diminished demand.
Non-energy sectors gaining traction. The petroleum industry tends to be a gravitational black hole, sucking everything from labour to capital into its orbit when times are good. That makes it difficult for non-energy players to compete. Today, companies in high-tech, financial services, transportation logistics and agri-foods are finding plenty of talented labour and cheap office space.
Rethinking energy. There's a growing understanding that while hydrocarbons remain core, renewable energy offers a way to diversify the energy sector. There's much work to be done. Alberta has the talent and ambition to be a world leader in clean energy technologies – all of which will complement, not replace, oil and gas.
Redefining attitudes. During the go-go days between 2010 and 2014, a sense of economic entitlement had crept into some quarters of the province. There was bravado. That's gone – replaced with a healthier sense that no one is entitled to anything. Salary expectations have notched back to reality, especially among former energy-sector employees who are considering new career options. Earnings in Alberta are still the highest in the country, but the gap is closing. That's improving business competitiveness.
See ya, recession. You won't be missed for the pain you've caused. Yet through the misery, Alberta has learned and grown. And it's emerging as a better place.
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