Albertans can expect to see more layoffs, mostly in the oil industry this year, but a softer job market is not all about gloom and doom, says a well-known senior economist.
Todd Hirsch, who spoke to Rimbey and District Chamber of Commerce at its annual general meeting held at the Best Western Rimstone Ridge Hotel Feb. 26, said a slower economy is not such a bad thing.
“I’m not expecting Alberta’s economy to crash and burn but it will be a little softer,” Hirsch said.
Hirsch attributes the slowdown to the difference in price between the benchmark WTU price, which he notes is still fairly good, and the Western Canadian benchmark price that has fallen due to more oil coming out of the United States.
Hirsch noted a key factor in the fall of the Western Canadian benchmark price is the North Dakota Shale Oil boon that has boosted oil production in the US higher than it has been for some time.
On a brighter note, Hirsch noted the forestry industry in Alberta is doing well as a result of the housing market in the US that is putting more demands on lumber.
Agriculture, as well, continues to show high returns,.
“I don’t need to do a lot of preaching here about how agriculture is doing,” he said. Grain and oil seed prices are quite strong and should be very good this year.”
He predicted 2013 to be an average year for homebuilders, noting prices slumped after too many homes were built in 2006/2007.
“They (home builders) are far more disciplined now and I think 2013 will be an average year for home builders.”
Hirsch stressed 2013 will not be a recession but simply a slowdown resulting in moderation, which could, in the end, turn out to be positive.
“Faster isn’t always better,” he said. And the occasional soft year always make the boom years feel that much better.”
Layoffs in the oil patch could result in more entrepreneurs setting off on their own. He predicted some energy company workers who get a pink slip will start their own tiny companies, which will be the foundation for the next generation of junior and midsized players.
Hirsch also noted a slowdown may make it easier to negotiate with British Columbia on the need to build a pipeline to the West Coast.
“It is difficult for Alberta to plead poverty with four per cent unemployment, high wages, zero debt and (until recently) embarrassing surpluses.”
He noted the oil industry is beneficial to all of Canada but it’s mostly Alberta that reaps the rewards.
A slowdown in the oil industry means other sectors may gain a foothold in the province.
Hirsch compared Alberta and its economy to its provincial bird, the Great Horned Owl, which he referred to as an adaptable, amazing animal, adding they can hear a mouse under four feet of snow and survive in almost any climate.
“The Great Horned Owl is a remarkable creature and Alberta is a remarkable province with a remarkable economy.”