“If you can walk away from a landing, it's a good landing. If you use the airplane the next day, it's an outstanding landing.”

— Chuck Yeager, Record-setting test pilot

Our fall Alberta Economic Outlook is out!

Let’s start with the good news. The tide has turned in the battle against inflation. We see the Bank of Canada keeping its cutting streak alive, and now see odds tilted in favour of a 50-basis point cut later this month. By mid-2025, we see the policy rate settling in at 2.75%.

The bad news is that many households will continue to feel the pain, as many more mortgages are reset at higher rates and prices are still so much higher than a few years prior. And even as the policy rate drifts lower, some longer-term challenges will remain, notably Canada’s weak productivity performance and stretched housing affordability.

We see the national economy growing by 1.2% this year and 2% in 2025.

We’re calling it a ‘softish” economic landing. That is, we anticipate that Canada will avoid a technical recession. But per capita output has been falling and the unemployment rate is rising. So ‘soft’ might be too, well, strong of a word.

Or, borrowing from Chuck Yeager, we can walk away from the landing, but some repairs to the plane are needed.

In Alberta, we’re expecting real GDP growth to be stronger, at 2.5% this year and 2.8% next year. There are a few reasons for the faster pace. Alberta’s population growth has led the country, with a relentless inflow of interprovincial migrants coming for jobs, but also more relatively affordable housing. That’s driving up housing demand and many more homes are now under construction.

The energy sector is also fueling growth, but not through the normal channel. New market access  is enabling significant production gains, propelling exports even as oil and gas investment remains steady. Further, more downstream projects are taking place in petrochemicals, hydrogen and biofuels, with a focus on emissions reductions. Other sectors like technology and food manufacturing are also adding to the growth picture. Our Outlook discusses major projects underway.

As the population booms, rapid labour force entry will continue to put upward pressure on the unemployment rate for the rest of 2024, before easing next year. And, as in the rest of the country, consumers will remain cautious.

As always, economic conditions are constantly evolving and there are plenty of risks out there. Concerns are shifting from inflation and labour shortages to geopolitical risks. We account for the uncertainty by running a low and high scenario around our base case.

We hope you enjoy our latest Outlook.

Answer to the previous trivia question: The freezing point of the common aviation kerosene (a.k.a. jet fuel or aviation turbine fuel) known as Jet-A1 is -47°C.

Today’s trivia question: In what European capital are the NHL’s Sabres and Devils facing off against each other to begin the 2024-25 regular season on Friday, Oct. 4 and Saturday, Oct. 5?