While some areas of the world are dealing with economic nightmares, in Alberta, the outlook is more of a fairy tale.
“Alberta’s economy is in a sweet spot right now. I call it the Goldilocks economy: not too hot, not too cold,” said Todd Hirsch, chief economist for ATB Financial.
Hirsch said recent drops in oil prices may not be exactly what provincial budget-watchers would like to see, but the overall impact of them is minimal — if not positive — in the long run.
“There’s enough momentum in Alberta’s economy and the energy sector in itself that even at $80 oil, it’s not going to please a lot of people but it won’t be enough to majorly derail our economy,” he said.
Upward spikes in oil prices, he said, even have the potential of making negative changes to the economy, putting upward pressure on things like housing prices and throwing off the balance of labour markets.
Alberta’s unemployment rate has remained steady quarter to quarter at just under four per cent. Hirsch said if it falls too low, it threatens to hurt industry because workers have the ability to demand higher wages and benefits. As it stands, those workers are seeing an overall increase in wages of around three per cent to five per cent.
According to a report from the city’s chief economist last month, Edmonton saw inflation hold steady at just over two per cent, meaning those who are working are doing well.
Hirsch said the food and accommodation industry could suffer from a lack of temporary foreign workers but the impact on the overall economy — as well as that for the average Albertan — will be small.
The long-run, however, is a different story. The province needs to find something other than oilsands to fuel the economy if the positive trends are to continue, said Hirsch.
“I think we are too dependent on one industry,” he said. “We’ve always been.”
He said people tend to worry about it more when there is a bust but stop talking about it when times are good, meaning governments never follow through enough on fixing the looming problem.
“It is something that keeps me awake a little bit at night. Not in 2015, but maybe 2025, what does our economy look like?”
He said a longer-term decrease in the oil economy as more countries try and ween themselves off hydrocarbons could pose more serious problems for Alberta if the province doesn’t diversify.
“In the long-run, it’s stacked against us,” he explained. “Energy is always going to be our strong card, but how do we increase that envelope of what’s captured in the energy sector. It’s hydrocarbons plus what other renewable energy sources could we be the champions of in Alberta. There’s still a lot of work we need to do.”