If it wasn’t for the bad news, there wouldn’t be much news at all when it comes to Alberta’s economy these days.
Just this week TD Bank declared the province was in the midst of its longest, deepest, recession ever and, to be perfectly clear, it is.
Alberta has been sputtering since the price of oil began to plunge two years ago. The result has been a projected drop in GDP of 6.5 per cent since 2014.
Add to that an unemployment rate hovering around 8 per cent and there is no question that Alberta is experiencing tough times.
But dig a little deeper and two years in to this downturn there are more than a few signs of life in Alberta’s economy.
The sparkling new River condominium complex sits on the southern bank of the Elbow River, which meanders past the affluent neighbourhoods of Elbow Park and Roxboro on the southern edge of Calgary’s downtown.
Anne Clarke’s heels click on the imported hardwood floors as the Sotheby’s real estate associate shows off the high end features of a 5,000-square-foot luxury condominium, which include city and mountain views, direct elevator access and a 24-hour concierge.
Of course, this kind of luxury doesn’t come cheap. The asking price for this suite was nearly $8.4 million, a hefty price tag in a city embroiled in a recession.
But this unit is already off the market, sold this week for the asking price, the highest sale price for a condo in Calgary in three years.
“We are starting to see a lot more optimism and so I think that what this shows is confidence in our market,” Clarke says. She believes the confidence comes in part from the fact that home prices have not plummeted here, despite the downturn in the energy sector.
It is a far cry from the early 1980s, when the last prolonged recession here saw the bottom fall out of real estate prices.
Clarke says that despite the two years of layoffs that have gutted many of the oil and gas towers in downtown Calgary, all but two of the units in this building have been sold.
‘Calgary is well diversified.’
— Anne Clarke, Sotheby’s real estate associate
“When we first started the project, we just assumed that it would mostly be oil and gas and that is not the case and that is the point. Calgary is well diversified.”
About 20 blocks away in Calgary’s booming east end you can find evidence of that diversity.
Cranes dot the skyline as new condo towers spring up around this once gritty neighbourhood, now the home of Canada’s National Music Centre and the future home of the city’s state of the art library.
Standing in the midst of his newly renovated office space, Bryan de Lottinville is struggling to stay on top of his company Benevity’s rapid growth.
“It’s been crazy but crazy good. This is our third space in the last two years and we are trying to find a larger one to anticipate our continued growth.”
Benevity provides software to major corporations from Apple to Google, that helps those companies and their employees give to charity.
De Lottinville says that even during the downturn his business is on the upswing, growing its revenue by about 150 per cent a year over the last four years.
“We had 13 people when we won Nike in 2013; we have 260 now. I think we hired 180 people last year alone, so there has been a lot of growth.”
Of course those hires pale in comparison to the more than 40,000 jobs lost in the energy sector since 2014. But despite those losses, Alberta’s unemployment rate of about 8 per cent is significantly better than during the early ’80s.
Less focus on oil and gas
De Lottinville believes that at least part of the reason for the better unemployment rate this time is that Alberta’s economy is not as focused on oil and gas production.
“There is a growing list of technology companies and other successful non-energy endeavours in this city.”
He says that a feeling of optimism and vibrancy persists in Calgary outside the energy sector, “Even out and about at restaurants and retail environments and in the real estate sector there seems to be a lot of activity.”
Retail spending dipped by almost 3 per cent in Alberta during the second quarter of 2016, but some retailers are still seeing growth.
Vancouver based MEC, formerly Mountain Equipment Co-Op, announced this week that it will open two new outlets in Calgary. MEC’s Jerry McGillivray says the move is rooted in strong sales here.
“For us the timing is really good, if you look at the Alberta retail market our MEC locations both in Edmonton and Calgary are faring much better than your typical retailer, for sure.”
McGillivray says sales in the company’s camping, cycling and canoeing areas are all up in Alberta this year and he says MEC sees a bright future in Alberta.
He may have a point.
Despite the hard times Albertans still earn far more than most Canadians, with Alberta’s per capita GDP sitting at around $77,000 compared with about $53,000 for the rest of the country.
It is just one reason why University of Calgary economist Trevor Tombe says Alberta could still be Canada’s best economy.
‘We have a higher fraction of our population employed than any other province — our earnings are much higher than any other province.”
— Trevor Tombe, University of Calgary economist
“In many ways we are still the strongest economy in the country, we have a higher fraction of our population employed than any other province — our earnings are much higher than any other province even today, so it is important not to lose that perspective.”
Of course that is cold comfort for the tens of thousands of Albertans left unemployed by the downturn. But Tombe says Alberta’s economy is more diversified than most think, with fewer than six per cent of workers being directly employed by the oil and gas sector.
And Tombe says that the number of people working in other sectors is growing as employment in oil and gas shrinks.
“Service sectors, health care, education — professional and scientific services — these are areas that are increasing their employment, so it is in areas like that where we are seeing a lot of the growth.”
There is no doubt that Alberta has been battered by a harsh economic climate over the last two years but many believe that the worst of this latest downturn is likely behind the province.
In the end the silver lining to Alberta’s longest and deepest recession ever, could be less about the damage done and more about how well the province has weathered that storm.