The end of 2024 is a fitting moment to look at how Alberta’s economy has changed in the last year. We’ve covered a lot of important economic stories this year inThe Twenty-Four, in areas like population growth, inflation, housing starts, film production and beyond. 

Yet there’s one important question that The Twenty-Four has not answered this year: how can you talk about Alberta economics at any holiday party?

The thought that any year-end gathering might take place without mention of the Alberta economy pains ATB’s economics team so much that we’ve prepared the following guide across eight trends vital to the Alberta economy in 2024. We aim to help you bring true cheer—the kind that comes from economic knowledge—to any holiday gathering.

Let’s begin.

1. Interest rates remain interesting

Of all the questions we get, interest rates have been at the top of the list.. In the battle against inflation, the Bank of Canada hiked its  policy rate to5% in July 2023, where it stayed for almost a year. In the last half 2024, the Bank of Canada has been cutting.

Expect that to continue in 2025. We project that the Bank of Canada’s policy rate will settle at 2.5% by mid-2025 - good news for borrowers

Where do you think the Bank of Canada will land? 

Let’s move on.

2. A tale of two economies

The US remains Canada’s biggest trading partner, but the two economies diverged this year, with the American economy growing at about three times the rate of the Canadian one—2.7% annual growth compared with 1%.

This gap is partly because Canada’s economy is more sensitive to interest rates than the American one. Tepid GDP growth in Canada, in fact, is helping to keep inflation in check and making the case for lower interest rates.

Where this all goes in 2025 is a matter of some conjecture. The second Trump presidency will undoubtedly have an impact with new tariffs already being threatened, but no one knows exactly what he will do when in office. It could be a surprise gift or an unwelcome lump of coal in Canada’s stocking.

3. Housing affordability

Inflation has made everything more expensive in recent years, including any snacks or beverages you might enjoy at a holiday party. Consumer prices in Canada are up 14.5% from April 2021.

But perhaps nowhere is the impact of inflation more keenly felt than when it comes to housing. The average house in Canada cost just under $540,000 in February 2020. Today that figure stands at $716,800. When you factor in today’s interest rats, housing is less affordable in Canada today than at any time since 1990. 

For Alberta, there is a silver lining here. Housing affordability is still a major issue here, but house prices remain lower in Alberta than in provinces like Ontario and BC.

4. The employment enigma

Job creation in Alberta was higher in 2024 than it was in Canada as a whole. But our unemployment rate has been climbing recently. What gives?

The answer is that population growth in Alberta has outpaced job creation. This is not ideal, but it beats unemployment rising due to mass layoffs. 

The province’s job vacancy rate has come down lately, though it remains high in certain sectors like construction and tourism and hospitality. .

5. The Jasper Wildfires

Wildfires devastated Jasper at the peak of the summer tourist season this year. Studies have estimated that about a fifth of all visitor spending in the Rockies takes place in Jasper, which works out to about $200 million in the third quarter of 2024 (which is when the fires hit).

The town has begun rebuilding, but the economic impacts of the fire will last into 2025 and beyond. 

6. The five million mark

Alberta’s population grew by 4.4% in 2024. This does not quite match the Grinch’s expanding heart after he returned the presents to Whoville, but it still led the country by far. It’s equivalent to adding nearly new Red Deers to the province.

Alberta is poised to pass the five million population mark in 2025, which will be a milestone for almost every part of life in the province.

For example, we expect home builders to start well over 40,000 new housing units in 2025 and 2026. This is one of the key reasons we expect Alberta’s economy to grow faster than the national economy in 2025.

7. Rising oil production

What do Alberta’s crude oil production and the ATB economics team’s love of holiday parties have in common? They’ve both never been higher. 

From January to September last year, crude oil production in Alberta averaged 3.91 million barrels a day—4.5% higher than the same period in 2023. The value of energy exports surged more than 9% in that same period.

Leveraging that economic strength is an important driver of Alberta’s economy, and will be an important factor in the province for the foreseeable future.

8. Productivity passivity

Productivity in Canada has been falling and is in the midst of a bit of an emergency.

Alberta has the highest level of overall labour productivity. In 2023, output per hour worked in Alberta was 21% higher than the national average. 

However, productivity growth in Alberta has also slowed over the last decade, due to structural changes and declining investment. At the party, you can pose this question: how can Alberta preserve its productivity advantage, which is largely driven by its strength in energy, while also diversifying? 

Whether you mention all eight of these trends at a year-end party or none of them, the economics team at ATB wishes you a wonderful holiday break. We look forward to continuing to chart Alberta’s economy in 2025. Happy holidays!