Four years ago, when the election writ dropped for the 2019 campaign, Alberta’s economy was tilting on a different axis — a world before COVID-19, soaring inflation or the return of US$100-a-barrel oil.
Economy
Alberta’s economy no longer plays starring role, but still key in 2023 election
On Monday, as UCP Leader Danielle Smith and NDP Leader Rachel Notley held separate Calgary events and officially kicked off the 2023 election campaign for the May 29 vote, the provincial economy is in a vastly different place, and both parties tried to burnish their credentials while lambasting the other’s record.
“It was all about the economy in 2019. That is not the case now,” Mount Royal University political scientist Duane Bratt said Monday.
“Those economic circumstances are completely different, and that affects the politics.”
Today, the economy across Canada is rebounding from the pandemic, while rising interest rates and the rising cost of living are critical consumer concerns. Oil prices are now hovering around $75 a barrel.
The Trans Mountain project is more than 80 per cent complete — although its price tag has soared into a stratosphere at $30.9 billion — and oil output in Alberta averaged record levels of production at 3.7 million barrels per day (bpd) last year.
However, Keystone XL is long since dead and buried, costing the Alberta government an estimated $1.3 billion after its investment was lost when the project was nixed by U.S. President Joe Biden.
After a robust 2022, Alberta’s economy continues to expand, although it’s expected to slow down this year to 2.1 per cent growth, followed by 2.8 per cent in 2024, the Conference Board of Canada forecasts.
“In our underlying forecast, we do see Alberta as kind of the stronghold for Canada in the next year,” said Pedro Antunes, the board’s chief economist.
“That’s, in large part, because Alberta is still really recovering from what has been a long, drawn out, almost recessionary period.”
But energy sector investment has gone up and drilling activity was strong during the winter months.
Another key economic force in the province today is the strong level of population growth, fuelled by rising immigration and interprovincial migration over the past year, said Alberta Central chief economist Charles St-Arnaud.
Alberta added more than 45,000 people in the final three months of last year, with a net increase of more than 29,000 new residents from international migration, and 11,000 people moving from other provinces.
“The fact our population is growing by about three per cent year over year is putting a lot of momentum into our growth,” he said.
“That has a spillover on the rest of the economy.”
However, wage growth has lagged the rest of the country recently, St-Arnaud noted.
The province’s unemployment rate stood at 5.7 per cent in March, down a half-a-percentage point from a year earlier, but it’s still above the national rate of five per cent.
With new investments expected to flow into promising areas such as hydrogen, carbon capture projects and agricultural technology, companies need to fill open positions — and there’s a need for the province to invest in post-secondary institutions and re-skilling workers, said Adam Legge, president of the Business Council of Alberta.
“People and talent and skills are the No. 1 issue for our members and most companies I talk to,” he said.
“We have shortages now and we will have even more shortages if we’re trying to make (these) significant investments.”
On the opening day of the 2023 election, economic and pocketbook issues did surface on the campaign trail. Smith announced the UCP will create a new eight per cent income tax bracket — beginning next year — on income earned under $60,000 annually, with people making above that rate saving up to $760 a year.
Those earning less will see a 20 per cent cut to their provincial taxes.
“We have done an incredible amount of work over the last four years to rebuild confidence in our Alberta economy and it’s working,” Smith told reporters.
“With an NDP government, Albertans will see real action to grow and diversify our economy,” she said. “Diversification is an absolute necessity.”
The state of the economy may not play the same starring role as it did four years ago. Yet, given the importance of attracting investment and creating jobs for the future, it will remain a key campaign issue over the next four weeks.
Chris Varcoe is a Calgary Herald columnist.
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TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
The Canadian Press. All rights reserved.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
The Canadian Press. All rights reserved.
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