Todd Hirsch arrived in Cochrane for a breakfast speech this week, carrying with him a lukewarm forecast “inching in the right direction” for Alberta’s economy with a conservative prediction of 2.8 per cent GDP growth this year.
The years 2010-2014 saw GDP growth rates of four to five per cent.
The chief ATB Financial economist and three-time author was the keynote speaker this month for the Cochrane Business Network (CBN). Around 25 people took in the speech over breakfast and coffee at the Cochrane Toyota multi-purpose room on the morning of April 10.
“It’s time for Alberta to drop the recession mentality … that’s not to say that everything is roses,” said Hirsch, explaining that the bottom of the recession was the summer of 2016 - with more than nine per cent unemployment in the province and exceeding 10 per cent around Calgary.
It currently hovers at a little more than six per cent and the economy appears to no longer be contracting, according to Hirsch.
Hirsch laid out his five-points that help inform his economic outlook, which is updated every fiscal quarter: pipelines; household debt ratios; international trade, or “all eyes on NAFTA;” the energy crisis; and the labour market.
Hirsch spoke to the healthy economy south of the border, with a four per cent unemployment rate, contrasted by the push and pull between President Donald Trump’s tax cuts and the federal reserve’s rising interest rates.
The potential impacts of not getting pipelines built as the provinces continue to be embroiled in a difference of environmental opinion poses “broader implications that go well beyond the Alberta energy industry.” He is concerned that a message of uncertainty is being sent to Kinder Morgan and the giant could pull out and simply build elsewhere.
Some audience members spoke to a need for “Plan B” should the pipeline giant simply walk away, and what kinds of options exist for Alberta through other opportunities – such as pipeline talks with the Yukon.
Household debt ratios have been amassing records since 2014, although the climbing interest rates put more pressures on families now than debt servicing did a few years ago. He predicts rising consumer insolvency, but does not largely fault this to reckless spending rather a byproduct of the economic downturn.
International trade continues to be in limbo with NAFTA hanging in the balance. Factors that make trade with the U.S. desirable over other international markets include fewer barriers associated with culture, language and geography.
Hirsch does not predict growth in the energy sector this year and feels the role of the energy sector has changed from being “the engine of the economy” to “the backbone of the economy” – where oil may no longer drive everything, but it continues to play a key role.
He predicts anxiety will peak as the automation, robotics and artificial intelligence industries continue to rise, but that history clearly reveals that job losses due to human technological evolution are soon replaced with new jobs – dating this back to the industrial revolution and Luddites.
One man questioned the replacement of high-paying energy sector jobs with lower-paying jobs in industries flagged for growth, such as tourism. Hirsch highlighted the wage imbalance the historically-thriving energy industry has had on other sectors.
Other industries poised to grow include agriculture and agri-foods (including cannabis) and transportation.
A measure of positivity in Hirsch’s forecast was matched by his belief in Alberta’s resiliency – as the most entrepreneurially-minded province in Canada and one of the world’s leaders in this arena.
The next CBN speaker will be Cochrane business coach Stephen Simms of Focal Point Coaching on May 8 at 7:30 a.m. at Cochrane Toyota.
The CBN is organized by volunteer entrepreneurs and small business people. To learn more about small business networking opportunities and future guest speakers, visit cochranebusinessnetwork.com.
