Earlier this month, Randy Thanthong-Knight, an economy reporter with Bloomberg Canada, wrote a story for Financial Post titled “‘We’re finally having our turn’: Boom times are back in Alberta”.
The problem, however, is that the article focuses on oil and gas growth then extrapolates it onto the rest of the economy, but it’s missing a few details that are critical for understanding the full story about Alberta’s economy.
First, the original title for the story was, according to the page’s HTML code “Alberta oil boom times are back”. The fact that they changed the title should tell you that the editors are trying to present a certain narrative.
Thanthong-Knight crosspublished his article on Bloomberg as well, with a title of “In 2007 Redux, Canada’s Oil Heartland Is Running Ferociously Hot”.
Either way, if you read the Financial Post article, you’ll find that it primarily focuses on growth in oil and gas.
Take a look at the article’s opener, for example:
Rob Hryszko’s phone is ringing off the hook. The calls pour in from executives in Calgary’s oil industry who want to know if he can build them a multimillion-dollar luxury home.
I find it interesting that Thanthong-Knight chose to start his article by talking about how great oil executives are doing. Just because oil executives are bringing in more money due to higher oil prices and higher profits doesn’t mean that the average Albertan is.
Look at this next paragraph:
There are now 28 on the wait list. For Veranda Homes Ltd., a small Canadian family-owned business that usually builds 12 to 15 residences a year, this is a lot. Those at the end of the line won’t get their homes built until 2024. . . . So high is his optimism that he’s making plans to almost double his homebuilding capacity.
So, somehow, a single luxury home builder building an extra dozen homes means that Alberta’s economy is screaming?
But enough about Rob Hryszko and his small homebuilding business.
Calgary, surrounded by fields of oil, natural gas, wheat and barley that make Canada a global exporting powerhouse, is at the epicentre of it all. Its employment rate is one of the highest of any large Canadian city and home sales were up 58 per cent in the first quarter.
It’s true that Calgary has one of the highest employment rates of any large Canadian city. In fact, the Calgary region has the 4th highest employment rate of all regions in Canada, not just large cities.
Here are the top 10 regions in Canada with the highest employment rates as of April 2022.
|Wood Buffalo-Cold Lake, AB||71.6%|
|Banff-Jasper-Rocky Mountain House and Athabasca-Grande Prairie-Peace River, AB||66.3%|
|Regina-Moose Mountain, SK||64.2%|
|Lower Mainland-Southwest, BC||63.8%|
What Thanthong-Knight didn’t tell you, however, is that Calgary has one of the highest unemployment rates, too. In fact, outside of Atlantic Canada (and one small rural coastal region of Québec with a combined population that’s less than Lethbridge), Edmonton and Calgary had the largest unemployment rate last month.
|South Coast-Burin Peninsula and Notre Dame-Central Bonavista Bay, NL||18.5%|
|West Coast-Northern Peninsula-Labrador, NL||17.8%|
|Cape Breton, NS||14.8%|
|Avalon Peninsula, NL||10.4%|
|North Shore, NS||7.6%|
|Saint John-St. Stephen, NB||7.6%|
Of all the cities near or larger than 1 million people, Edmonton and Calgary topped the list for unemployment in April 2022.
So, how can Calgary have such a high employment rate and a high unemployment rate? Well, it’s based on how the two values are calculated.
The employment rate is the number of persons employed as a percentage of the population who are 15 years of age and over.
The unemployment rate, however, is the number of unemployed persons as a percentage of the labour force. The labour force for Calgary in April 2022 was only 70.6% of all those 15 years old and older.
So, in short, employment rate is based on everyone who is 15 years and older, and unemployment rate is based on just those in that age group who are part of the labour force.
Either way, it’s misleading to say that Calgary has one of the highest employment rates in the country while simultaneously ignoring its high unemployment rate.
Never mind the fact that there’s more to Alberta than just Calgary, and this article was supposed to be about boom times being back in Alberta, not just Calgary.
Thanthong-Knight then goes on to say that “job creation in the province of Alberta is expected to top the nation this year”. I’d be curious what that prediction is based on. Because as of this past April, Alberta had the highest unemployment rate outside of Atlantic Canada.
In fact, some provinces have super low unemployment rates. Québec’s unemployment rate was at 3.9% in April, two full points lower than Alberta’s.
Assuming Thanthong-Knight’s prediction is right and Alberta will outpace everyone else on job creation, is that because they’ll be trying to catch up to where everyone else already is? Also, how many of those jobs will be part time jobs—because right now, full-time jobs make up a smaller percentage of total jobs in Alberta compared to 3 years ago.
Is it really a boom if more part-time jobs are created because people have to work 3 of them just to make ends meet?
Not only is the boom generating the same acute shortages and runaway inflation that are rocking governments across the globe, but it highlights a reality that some Canadians would prefer to ignore: Commodity exports are still the engine that propels the economy. In March, the fossil-fuel industry represented 27.4% of merchandise exports — matching a record.
Okay, but this is misleading.
Statistics Canada data on merchandise exports is based on value, not volume. And when you consider that the price of oil between the end of February and the end of March increased nearly 5%, it’s not surprising that the value of fossil-fuel exports would be worth more.
There’s just no easy substitute for the money-minting power of oil and gas. The energy sector represented 25% of Alberta’s economy last year and about nine per cent of Canadian output.
Again, this is based on value. Remember that the price of oil tanked in 2020, which means that as oil prices increased in 2021, that increase would’ve driven up GDP in Alberta’s oil industry.
A tiny example of the spinoff effects can be seen at the Petropolitan, a luxury pet-grooming and boarding business in the heart of Calgary’s downtown office district. Founded in 2019 and then hammered by the pandemic, the business is growing exponentially now. Revenue grew 125 per cent in the first quarter compared with the same period last year and is expected to jump 160 per cent in the second quarter.
Again, another small business and once more centred in Calgary. This anecdote isn’t evidence of anything besides that it has more customers. There’s no proof that the additional customers are because of an actual improved economy, or one with more economic activity than it had at the start of the pandemic.
But Calgary is coming back. The 17th Avenue SW district, a retail and entertainment hot spot where Veranda’s office is located, is buzzing with students and young professionals. Hotel lobbies have business travellers again. Lunch and after-work crowds fill up popular spots downtown as more people are returning to offices.
More anecdotes. All of this can be things returning to pre-pandemic levels and of themselves aren’t evidence that we’re in a boom.
And it’s attracting new residents again. Alberta led the country in net migration from other provinces in the fourth quarter — mostly people from Ontario, Manitoba and Saskatchewan — for the first time since 2015.
That’s technically true, but it leaves out the fact that we had several quarters in a row with negative growth.
In fact, starting with the second quarter of 2020, Alberta saw 5 straight quarters of more people leaving for other provinces than moving here from other provinces. Even with the gains over the last two quarters of 2021, we’re still short nearly 8,000 people.
Since the second quarter of 2020, Alberta has seen 113,300 people move there from other provinces. On the other hand, there were 121,272 people moving to other provinces during the same period.
Not only that, but if we include every quarter since the UCP were elected, we have a net loss of over 8,000 people.
Thanthong-Knight provided very little evidence to support the title that Alberta is in the middle of a boom, and the little evidence that was included was cherry-picked and lacked context.
By nearly every economic metric, Alberta is still near or below pre-pandemic levels and certainly not even close to 2014 levels. To say that Alberta’s economy is booming is misleading.