4/30/2020

PROVINCE OF ALBERTA ECONOMIC OUTLOOK 2008 PACIFIC NORTHWEST ECONOMIC CONFERENCE

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THE BOOM IS OFF THE ALBERTA ROSE!

         Boom Boom Boom Boom By the Animals Everything is Beautiful By Ray Stevens Hurts so Good By John Mellancamp Flirtin’ with Disaster By Molly Hatchet I’m Still Standing By Elton John Truckin’..What a long strange trip its been by the Dead I Can See Clearly Now By Johnny Nash On a Clear Day, You Can’t See Forever Don’t Cry for Me Alberta 4/30/2020 2

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WHAT HAS HAPPENED SINCE LAST YEAR

 The Alberta economy grew by an estimated 6.6% in 2006  2007 saw robust growth in the first half followed by slower growth in the second  Final estimates are not yet available, but the consensus is that growth was in the 3 and ½ to 4 percent range.

 Alberta’s nominal Gross Domestic Product (GDP) rose in 2006 to an estimated $242 billion, or 17.0% of national GDP. Alberta has 10.4% of Canada’s population.

 Going 90 miles an Hour Down a Dead End Street by Hank Snow 3

 

More about last year

In 2006, net in-migration was 57,000.

In 2007, in-migration continued at relatively high levels, but out migration exploded.

   Alberta had a net loss in the past quarter.

The first time in 14 years!

Movement was predominantly to British Columbia and Saskatchewan, but in the last quarter, there was net out-migration to seven provinces.

 You say hello and I say good bye By the Beatles 4/30/2020 4

Still more about 2007

 The unemployment rate for 2007 was 3.5%, the second lowest in 30 year history  Participation Rate is now 74.5%...the highest ever recorded in Canada.

 Alberta’s employment levels grew by 88,700 in 2007, a 4.7% increase.

 Everybody’s Workin for the Weekend by Loverboy 4/30/2020 5

2007 and Inflation

  The tight labour market placed pressure on wages and salaries, which increased by 11.5% in 2007. Hourly wages increased by 6.2% between February of 2007 and 2008, more than double the national increase.

Alberta’s CPI inflation averaged 4.9% in 2007, up from 4.7% in 2006 and nearly double the national increase. Up By Shania Twain or Money for Nothing by Dire Straits 4/30/2020 6

Housing in 2007

 Slowing economic and population growth resulted in housing starts settling to 38,478, a little over 5% lower than last year.

 You can’t always get what you want, but sometimes you can get what you need-The Rolling Stones 4/30/2020 7

Manufacturing in 2007

 Manufacturing has been virtually flat since late 2005  Alberta has the fastest growing manufacturing sector in Canada over the past five years…little to brag about!

 Hanging Tough by the NKOB or  Nothing from nothing Bill Preston 4/30/2020 8

2007 Investment

 Capital investment was over $80 billion dollars in 2007.

 It is expected to grow by 3.8% in 2008.

 The growth will be driven by energy investments, particularly in the oil sands.

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Exports in 2007

 Exports in 2007 rose to $80.855 from $77.740 billion.

 This represents a 4 percent increase.

 Early indications suggest that exports will continue to rise in 2008 despite the strong Canadian dollar.

 It will be energy driven  Grease by Frankie Valli 4/30/2020 10

The Future-GDP

 After the boom in 2007, growth will “settle” with growth in the 3.0 to 3.5%.

 This will still be one of the top two or three growth rates in Canada.

 The Conference Board sees Alberta leading growth in Canada as far in the future as they look.

4 3.5

3 2.5

2 1.5

1 0.5

0 2007 2009 2011 3-D Column 1

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The Future-Employment

 Continued rapid growth in employment.

 Growth will be in the 2.0% range  Accelerating employment is expected to being again in 2010

2100 2050 2000 1950 1900 1850 1800 1750 2006 2008 2010 3-D Column 1

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The Future-Unemployment

 Well, it is what the model says, but  Our most recent unemployment rate is still 3.4 and the drift is sideways or down…not up  The increase can happen only with big in-migration  Do You Believe in Magic by the Lovin’ Spoonful

4.2

4.1

4 3.9

3.8

3.7

3.6

3.5

3.4

3.3

2006 2008 2010 3-D Column 1 3-D Column 2

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The Future-Housing Starts

 This is probably closer to reality  Rapidly increasing prices will force more into rentals  It may be one of the few things to go down in Alberta  And the Walls come Tumbling Down by John Cougar Mellamcamp

50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2006 2008 2010 3-D Column 1

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The Future-Population

 Alberta will continue to grow  It will be dependant on the strength of the rest of Canada’s economy  It will also depend on the ability to provide infrastructure in Alberta

3,800 3,700 3,600 3,500 3,400 3,300 3,200 3,100 3,000 2,007 2,009

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3-D Column 1

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The Future-Inflation

 I still don’t have confidence in these numbers   They will come down Housing prices have stabilized  If the assumptions on growth are low, so are the inflation rates  Wishin and Hoping by Dusty Springfield

3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2008 2010

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3-D Column 1 3-D Column 2

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So…what happens next

 We are going to continue to grow and rapidly.

 It will be driven by investment and population growth.

 The government will begin putting significant amounts of money into a “rainy day.”  We still do not have a decision on how best to manage growth.

 See you with the results in a year!

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THE KEY ASSUMPTIONS

 Oil is $78 in 2008  Gas drops to $6.75 per gigajoule by 2009  Canadian dollar remains .95=.99

 Canadian economy continues on a modest growth path 18

OILSANDS INVESTMENT

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18 16 14 12 10 8 6 4 2 0 1996 1999 2002 2005 2008 2011 Oilsands Investment ($billion)

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Other things that you can do with Music!?

 Hip to be Square by Huey Lewis and the News  Are you Experienced by Jimi Hendrix  It’s my Party by Leslie Gore 20

The Last Slide of 2008

 The last song of the presentation is “The End of the Road” by Boys to Men 4/30/2020 21