The economic tiger that was the Edmonton to Calgary corridor has been hurt but it will roar again, predicted TD Financial Group’s chief economist in Red Deer on Wednesday.
A recession that cost close to 400,000 Canadian jobs officially ended this summer, said Don Drummond, who also serves as a TD senior vice-president.
But expect a slow-motion recovery.
“I don’t think anybody in Canada is going to be all that quick to recover, certainly if you measure by employment,” Drummond told media following a speech to a near-capacity Chamber of Commerce luncheon crowd of 250.
Employers always keep enough workers to ramp up production when the orders come back, he said.
“So you can always increase your production to some degree without hiring new people. So you always see employment as a lag, and I suspect that would be the case in Red Deer and everywhere else in Alberta. You probably won’t see any meaningful job creation in the province, including the city, until well into 2010.
“But that would be the same pattern we’ve had in every recovery in Canadian history.”
In Red Deer, the recession caught up to the workforce with a vengeance in the last six months and it may be some time before those job losses are replaced, he said. As a major player in the oil and gas service sector, Red Deer avoided until recently the sharp job losses felt in many other communities, he said.
However, with natural gas prices and oil prices not expected to recover until late next year or 2011, the economic situation is expected to improve only slowly and Red Deer will remain a “lagger.
“There will be growth, but I would expect the growth for 2010 will be more like the one and 1.5 per cent range for Red Deer, as opposed to Canada, (which) will be two and 2.5 per cent.”
Adding to the area’s job troubles is the turmoil in the hog industry, he said.
But there are positive signs for Alberta. Housing prices fell, but nowhere near as dramatically as in the U.S. and the market is rebounding. And the oil and gas and manufacturing sectors are expected to bounce back.
Drummond made it clear to the business crowd that this recession was one for the history books. Over the last year or so, world economic output declined by 1.1 per cent — the first decline since the modern statistics began in the 1960s.
Perhaps even more remarkable was how global the recession was. Almost all countries got nailed at the same time, regardless of their individual and regional economic factors.
In the U.S., the recession was the deepest since the Second World War and threw eight million people out of work. In Canada, 387,000 jobs were lost, a tally he called “staggering.”
Despite the carnage, Canada fared better than it did during recessions in the 1980s when unemployment topped out at more than 12 per cent. Unemployment peaked this time at 9.3 per cent.
Drummond said governments will still have their work cut out for them untangling the fiscal mess and finding ways to reduce the debt that has piled up.
All administrations will face the challenge of paying rising health care costs, which are climbing at six per cent a year. In the 1990s, health care accounted for one-third of government spending. It is now at 45 per cent.
“This is literally the Pac Man that’s eating up everything else.”
Chamber president Dom Mancuso said Drummond’s take on the local economy echoes what he has been hearing in the business community.
“I think we’re slowly going to get there but it’s not going to happen overnight.”
Mancuso believes the economic decline has levelled off and now it’s just a question of how fast the recovery will be.
He’s optimistic the economy will get a boost when government stimulus funding kicks in next year.