Are Things Really That Bad?
The media and the armchair social media pundits would have you believe that the sky is falling in Alberta. Some of that may be real concern, and some may be schadenfreude aimed at Alberta by provinces that have long envied the success of Canada's economic engine.
Late last week the provincial unemployment numbers were posted. Alberta's unemployment rate for April, 2015, was 5.5%. Not great, but not bad - especially in light of the national rate of 6.8%. While it is somewhat concerning that this rate was up half a point since the same time in 2014, I wouldn't say we've reached full Chicken Little status yet.
For a little perspective I did some digging and found the following table on the Government of Alberta's website. You'll note the nice run we had between 2005 and 2009 of sub-4% unemployment and a big spike in late 2008 - 2009 up to 7.3% or so. This gradually came back down to bottom out at 4.3% or so in mid 2012. The last time we saw 5.5% unemployment was August of 2011, but all in all, those weren't bad times per se.
Also interesting to note: Business bankruptcies are at their lowest point in this dataset which goes back to 2008. Business bankruptcies in Alberta are way down year-over-year, in spite of an increase nationally. It'll be interesting to see if this trend continues. Unfortunately consumer bankruptcies are up about 10% year over year.
What Does This Mean?
I think it probably means that capital flows and liquidity are more important to the province's business sector than the price of oil...at least in the short-term. You'll recall we faced a real liquidity crisis towards the end of 2008, which, according to the graph, resulted in significant job losses from which we've never fully recovered. It was a broader and more abrupt slowdown. Oil prices being depressed isn't a good thing for the province, but it appears to be having a more moderated impact on employment.
As oil prices bounce around and hopefully recover a bit, and barring any nasty uncertainty associated with the new government in Alberta, it's a safe bet to assume that unemployment could settle in somewhere between today's number and the full-on panic of the liquidity crisis. Given that we're seeing very strong housing markets in provinces that have much higher unemployment rates than ours, along with fewer housing starts here, it's even safe to assume that the Alberta housing market can weather the downturn in the economy very nicely. The added inventory on the market will present a buying opportunity for bargain hunters and investors, while new migration will continue to drive demand.
Time will tell.