Calgary Economic Development
"Calgary will experience a Charlie Brown economy in 2010; an economy that
experiences variable performance with ups and downs, similar to the pattern on his shirt. This is a result of Calgary’s economy being dependent upon the state of the U.S. economy and energy markets."
"Calgary, despite best efforts, is still essentially an oil and gas economy, reliant upon the state of energy markets. So, ultimately, as energy prices rise and fall, so does the economic activity in Calgary. We try hard to find new economic activities to strengthen, such as technology or creative industries. We work to put strategic infrastructure in place to make Calgary a more attractive place to work and live, such as airport enhancements and public transit. We are the volunteer capital of Canada. However, we can’t escape a global recession. When oil and gas prices fall and capital dries up, the economy is affected as companies cut spending and jobs. All across the value chain the impacts are felt. Cuts to oil sands capital expenditure result in the loss of work and jobs for engineers, lawyers, accountants, financiers, manufacturers, and transporters. When wages are lost or cut, housing markets are affected and retail spending is curtailed."
"There is great risk in believing that this economic recession is done and gone, for that may create complacency. We risk going back to our former ways. Some people have been more greatly impacted than others - mostly those that have lost jobs - but, in Calgary, for 93 per cent of the labour force, very little has changed in the grand scheme of things. Humans learn from mistakes by adapting behaviour. If we assume all is well there is a risk that we will not have learned our lesson well enough. It is interesting to reflect that we will never claim that we are in recession until there is irrefutable proof of at least two consistent quarters of negative performance. Yet, before we are actually even out of recession we proclaim we are out of recession. Human nature. Cautious on the negative; optimistic on the positive. Again, this approach sets us up for greater challenges ahead, if we don’t truly reflect on the impacts, and adapt behaviour accordingly. More meaningful and sustained recovery is ingrained in a greater and more robust scorecard than currently being watched by the majority of the developed world. We celebrate with one day’s worth of positive data, only to sink the following day on negative performance of some other data."
"Recovery is going to happen. When exactly, no one knows. Balance sheet recessions, like the one we are in, have proven historically to be longer and slower to recover. It might take another 6, 12 or 18 months before we can truly say that the worst might be behind us. And when it does, it likely will be a slow, steady recovery that will look incredibly modest. In the long-term however, more modest growth rates might become the new norm, and ultimately be what we need to keep us honest."
City of Calgary
"The Calgary market is struggling with opposing forces. Investors and builders wish to see continued and sustained price increases. First-time buyers in 2010 are facing increased prices that are testing their ability to pay while new federal legislation has more stringent mortgage qualifying requirements. The downturn in energy prices has also put a pause on the residential market while anticipated interest rate hikes are resulting in a short term increase in demand as buyers seek to get in while they still can."
"After dropping 14 per cent from peak prices in July 2007, average prices in Calgary rose throughout 2009 by 5.4 per cent, which is almost double the average price appreciation experienced in the 1990’s. Th e wildcard for the future is interest rates. If they go up too high too quickly they will dampen sales activity, but our expectations are for the prime interest rate to be stepped up in small increments, with a muted impact on posted mortgage rates over the next year. The outlook for housing prices in Calgary is a short run-up in anticipation of increased interest rates, then a market pause after June and a normal annual cyclical pattern returning to the market with September being the hot month of the year for sales. Continued weakness in job creation may pose a downside risk to the forecast."
September 7, 2010
Calgary Economic Outlook
Calgary Economic Development