Alberta has a long history of boom and bust cycles, and certainly this latest downturn has been challenging for our region. Already there are indications of a modest economic recovery in 2017, but it’s not entirely clear what that might look like. WE magazine looks at some predictions for the year ahead and the impact of the economic climate on our community.
A New Normal?
Increasingly, our local economy is being affected by global factors. That’s been the case for a long time but even more so in recent years. So when the price of oil dropped from $115 per barrel in June 2014 to under $35 at the end of February 2016, Alberta – and especially the energy industry – was hit hard. But there are indications that the worst is over, with economists predicting a modest recovery for 2017.
“The only reason we raise money is because we’re trying to help people, trying to accomplish change for people at the end of the day,” says Allan Undheim, vice-president of community building and investment for United Way.
Some experts are predicting that the days of $100+ barrels of oil are gone and what we are experiencing is a “new normal.” Todd Hirsch, chief economist of ATB Financial, in a recent economic forecast delivered in Calgary, predicted that the price of oil would hover around $45 to $55 through 2017 and beyond. Those prices are not enough to bring about big investments or job gains but will have a positive impact on the energy sector. Hirsch expects Alberta to see modest growth of 2.1 per cent in GDP this year but said a job market recovery could still be months away.
Similarly in Edmonton, chief economist John Rose said in a news release he expects the city’s economy to grow in 2017 but also cautions that it will be modest. He predicts that job opportunities will increase this year but as people come back into the labour force it will likely result in a slight increase in unemployment. “Our unemployment rate will probably move up well above seven per cent unfortunately, probably in the range of 7.5 per cent as we get into the first half of 2017.”
On the positive side, Rose says with the economy beginning to stabilize, Albertans have started to spend money again. And looking further ahead to 2018 and beyond, a series of infrastructure projects will bring employment opportunities to our region.
While we seem to be on the road to recovery, the labour market, combined with factors like a rising cost of living and a lack of affordable housing, could lead to more instances of situational poverty. “There’s a myth that poverty is mostly generational and that there are specific people who have lived, and always will live, in poverty,” says Allan Undheim, vice-president, Community Building and Investment, with United Way of the Alberta Capital Region. “What we’re seeing and have always seen, however, is situational poverty; people who’ve fallen into poverty because they or their partner have lost a job, or as a result of many other factors, including illness, death of a spouse, or fleeing domestic violence,” he says.
Other instances of situational poverty are emerging as a result of an increased number of newcomers arriving in the province. Many are willing and able to work and, in fact, have relevant skills and significant credentials, yet are still unable to find suitable employment. “Those kinds of situations could become a much bigger problem if we can’t support them in the short term to help with their transition,” he says.
Meeting the Need
With instability in the marketplace, some people who have lost their jobs may no longer have the disposable income to donate to the community like they used to. Others who may still have the ability are reluctant, perhaps out of fear that they may lose their jobs in the future. “So, as a result, we have increased needs that we’re trying to address; yet, decreased ability to do so given the lack of corresponding philanthropic dollars available to be able to invest in order to meet these needs,” says Undheim.
Fortunately, our community has always been one that rises to the challenge and tackles adversity head-on. Despite the economic challenges, there’s reason to be optimistic as this has always been a community that rallies together and takes care of each other.