consensus seems to be that AB will trail all other provinces next year in growth which for AB will feel much different in a bad way. ON and QB will notice a difference but barely. the real differences won’t start to show for 3-4 years and only if oil remains sub-$70, which isn’t that crazy if Iran unleashes their 2M+ capacity and Venezuela keeps the taps open. its only when you start to see labour flight that you need to get worried.
^ Huh? Take a look at the provincial forecasts, Dec 17: http://www.td.com/economics/analysis/forecasts/forecasts.jsp And here: http://www.rbc.com/economics/economic-reports/provincial-economic-forecasts.html BC and Ontario may slightly outperform, but AB is ahead of the national average in real GDP growth forecasts. The decline in nominal GDP should be beneficial as it reflects some better price stability. One thing the economists and yourself seem to ignore is AB’s tremendous fiscal capacity. AB could pay $100k to very family in AB and still have less net debt per capita than Ontario. And the tax room here is huge. With the PCs eyeing a summer election here, believe me they’ll use this capacity.
the websites you referenced assume WTI prices of $70-$80 over the next two years. if oil averages $50-$60 this year, which seems much more likely than $70-$80 at this point with oil at ~$48, AB will underperform basically every province. with WCS at $40, no growth will occur in Alberta’s north and likely no work aside from those projects that are >50% of the way done will be completed until WCS breaks $50 and holds it for quite some time.
what you seem to ignore is that WTI could be at $40 for half a decade and AB might have to give money away to stay afloat… the great risk for AB is labour flight if oil prices remain low.
You said “concensus seems to be” yet the major economic forecasters aren’t saying what you implied, at least not at this point. Folks are still hiring, things are still rolling on. Yes, if oil is at $40 for a decade things will suck here but that’s not a likely situation.
It already started and I’m guessing you will see it in the official numbers soon. I personally know 2 people that cancelled their plans to move out West and 2 more that are returning back home. At a networking event last week, I heard similar stories. It’s the first time I sense the migration trend reversing since I’ve been in the labor market, and that includes the downturn in 2008-09.
^ Let’s see where oil is in July. If its still $4x, then I agree there is an issue out here. That said, 75% of AB GDP is non-oil so its not like we are all-in. In fact, many businesses located here are here because of proximity to petrochemical feedstocks which are cheaper now than before. Lots of Alberta businesses benefit now as well, though just obviously not as much as we lose when EnCana, Suncor and Husky are struggling. But its not all bleak. I’m not really worried about my spot, I don’t work in oil and gas. We are actually adding to the team in the next six months. Still lots of opportunity. The unskilled and blue collar workers will struggle though. It will be hard to demand those $300k/yr contract jobs with these prices.
forecasters ARE saying what i implied they just haven’t written anything about it yet. since their GDP forecasts as per their reports rely on $70-$80 oil next year and in 2016, and their own firm’s oil price forecasters are bringing their price decks down to the $55-$70 level for 2014, it means the December reports are not what the firm actually believes and therefore overstates AB GDP growth. and the $55-$70 forecasts will look incredibly bullish if we see oil at $40-$50 for 3 months as you’d need to see prices average $75-$80 in Q2-Q4 to average $70 in 2015. the longer oil sits at $47, the more projects are delayed and the more capital and labour flight we’ll begin to see. if labour begins to leave en masse, the economy will get hammered as the housing market will slow meaningfully.
as most companies that use energy as a major input (e.g. Chemicals industries, manufacturing) rely on the energy sector as the source of their primary customers, i doubt these sectors will rebound the same way that ON and QB chemicals and manufacturing companies will.
these cycles are normal and tend to last a long time. my in-laws and a large number of 50-65 year old Ontarians worked in AB for several years and were forced to leave at the end of the last major cycle in the 80s. i suspect we’ll see another generation leave for a couple of decades only for their children to find their way back to AB in the 30s.
^ Folks were saying that in 2008-09 too. If you moved here in 2009 though, you’d have made a very good decision for the next five years. Like I said, if this sticks until the summer, then we are in some trouble.
you seriously can’t believe that today resembles 2008. it clearly resembles 1985 or 1998 and definitely not 2008.
in mid-2014, the U.S. economy just grew at the fastest rate in decades and Q4 will probably be decent too. there’s virutally no sign of credit strain, especially outside of the HY debt of overlevered energy companies, so to attribute the oil price decline to credit conditions or the broad economy similar to 2008 really doesn’t make any sense. if 2008 was to look like today, then oil prices should have been declining in 2006-2007, as the economy began to wane but before the credit crunch heated up in mid-2007, not in July 2008, when the credit crunch started to peak, major financial institutions were going down and everyone was worried about the end of the world.
when JPM trades at $20, i’ll begin consider your comparison to 2008. but still, everything happened opposite in 2008 compared to today. this is clearly the end of a commodity supercycle, similar to the 80s, and like back then, oil is one of the last to go b/c of its unique OPEC dynamic relative to other commodities.
there’s a lot more to economic history than just 2008. you can’t say “this is just like 2008” when it looks nothing like 2008 and there are 10 other periods that more closely resemble the current one than 2008, including two that appear nearly identical.
I’m shocked that the East vs West debate in this thread has not mentioned yet the upcoming elections in the Fall. If the Liberals win, the political power (which is as important as economic power) will shift East. You won’t have a government pushing or spending on big energy projects anymore; in fact you will most likely see the opposite with more environmently friendly influential ministers representing the will of their ridings. If ever the Libs win, it would mean Quebec/Ontario will have 75% of the MPs in government and Alberta will possibly have no one. More spending will be done in sectors priviledged by the provinces in power and with that will come more economic power.
The Liberals won’t have a majority government. We are heading for a minority situation with a complex coalition setup happening. The Liberals will team up with the Conservatives to keep taxes low, military rolling, things not too crazy, while the NDP/Liberals will team up to push social pet projects that force us into deficits, while the Conservatives/NDP will team up to push populist issues. Really I can’t see a time in Canadian history where all segments would potentially be so well represented.
If the NDP is below 15% and the Bloc below 15% in QC, there will be a majority government. The Libs strategy during the campaign will be to say a vote for the NDP is a vote for Stephen Harper. They will pound that slogan again and again and again. All they need to convince is Ontario and Quebec to get a majority. The best bet for Harper is a Bloc revival in Quebec as that neutralizes Quebec and the numbers ex Quebec are in his favor. There won’t be another orange wave here unless the NDP is clearly the alternative to the current government in the polls. The fate of the current government depends on whether one party on the left can unite all the disenchanted.
Hi ,
what was your experience? Where did you land? I have 4 yrs of work exp in equity trading in India & am a CFA level 3 candidate. I am planning to move to canada in next 3 months.
CFA means shit…