'Herd of negativity' tramples Alberta's good-news story
National media ignore signs pointing to continued growth, economist says
Gary Lamphier
The Edmonton Journal
Thursday, November 06, 2008
Edmonton / Richard Corriveau has a bone to pick with the media -- the Toronto-based national media, in particular -- and I think he's got a point.
Corriveau's beef? One-sided, overly simplistic, obsessively negative coverage of the economic slowdown in Alberta.
While Ontario and Quebec do face some tough challenges, Corriveau -- Canada Mortgage and Housing Corp.'s regional economist for the Prairies and territories -- says Alberta is in far better shape to weather the storm.
Sure, a slowdown in Oil Country is underway, he concedes, after years of overheated growth. But contrary to some of the gloomy headlines he's seen in the national press, the sky isn't falling.
"We're not suggesting that we have a shield around this province, but we are forecasting that Alberta will remain one of the growth leaders into 2009. We'll remain one of the strongest economies with one of the strongest labour markets," says Corriveau, who addressed the 2008 CMHC Housing Outlook Conference at the Shaw Conference Centre on Wednesday.
Unfortunately, Corriveau says that central message doesn't seem to be getting out. The media, he complains, seem much more interested in trumpeting bad news, such as spending cuts or project delays. And that's likely to exacerbate whatever downturn is at hand.
"We think it's good not to join in with the herd of negativity," he says.
Even when there's positive news in Alberta -- as there was Tuesday, when oil prices soared, sending the Toronto Stock Exchange's main index up nearly 400 points -- Corriveau pointedly notes that one national paper simply ignored it.
Instead, the lead headline in the paper's business section the next day focused on the record $8.45 billion in assets that "panicked investors" pulled out of mutual funds in October, which it dubbed a "month of fear."
"You pick up a newspaper the day after oil prices increase by nearly $7 (US), and the TSX has rebounded 400 points to in excess of 10,000, and I didn't see much commentary on that. Yet I'd argue that if it had gone the other way, we certainly would have," he argues.
"I think the media have their role to play. But I'm not certain the debate is balanced. So we've tried to present in our outlook some of the bright spots we see that are simply being ignored."
Example: Alberta's huge lineup of major capital projects, totalling more than $286 billion as of September. The tally includes more than $210 billion of energy projects, and $37 billion of infrastructure and institutional projects.
Sure, some major oilsands projects have been delayed recently in the wake of the credit crunch and the drop in oil prices, Corriveau says. But he's confident those projects will get built, once markets stabilize.
"Mothballing is a term that's been overblown. We don't believe projects are being mothballed. Rather, there will be a slower pace of capital spending, with some projects being deferred.
"As a result, we likely won't see production starting for some of these projects until later."
The bottom line? Slowdown or not, Corriveau forecasts continued growth in Alberta through 2009, even as North America flirts with recession.
"We do not believe Alberta is going into recession -- I'd like to make that perfectly clear," he says.
Corriveau expects Alberta's economy to grow by 2.1 per cent in 2008 and 1.9 per cent in 2009, on an inflation-adjusted basis, after expanding at a 3.3-per-cent clip last year and 6.6 per cent in 2006.
And while job losses are mounting in Central Canada's troubled manufacturing industries -- notably the auto sector -- Corriveau sees continued employment gains in Alberta, at a rate of 2.6 per cent in 2008 and 1.3 per cent in 2009.
In fact, he says labour shortages are likely to persist in Oil Country, even as migration levels
rebound.
With first-half data already in the bag, Corriveau expects net migration to hit 56,000 in 2008, and 51,000 next year.
Although that's still below the massive inflows the province recorded at the height of the economic boom in 2006, when Alberta attracted more than 70,000 net new migrants from elsewhere in Canada or abroad, it's up sharply from last year's inflow of about 43,200.
On the housing front, Corriveau expects average home prices to stabilize in the wake of the correction that's been underway since mid-2007.
He projects a slight increase in sales volumes and a modest uptick in average Alberta home prices to $356,000 in 2009, from $353,500 this year. While the market for single-detached homes is
already strengthening, however, the multi-family market will continue to struggle until inventories fall.
Nonetheless, the expected pickup in net migration levels is likely to help, and there are few indications that existing homeowners are feeling overly stressed by the economic slowdown, he notes.
The percentage of mortgages in arrears remains low, in historic terms, and the ratio of equity to home prices remains near the record highs recorded last year.
In a nutshell, Corriveau figures the economic news for Alberta remains pretty positive. As a member of the media, I'd like to be more negative, of course, but I've got to call a spade a spade. Hope you can handle that.
glamphier@thejournal.canwest.com
