Some have said that the City of Edmonton was sheltered from the true down turn of 2016 in Alberta. The city showed some resiliency in 2016 and was even insulated from the calamity that befell the rest of the province because of government operations. However, the president of the Edmonton Economic Development Corporation thinks 2017 is going to be one of the hardest years on record.
In a recent interview with Postmedia/Edmonton Journal, Brad Ferguson talked about what he sees next year for the Capital Region in what he calls a year that might prove to be the hardest in Edmonton’s economic history.
A review of 2016
Ferguson said that 2016 started out on an optimistic foot for Edmonton as the city seemed to be faring better than the rest of the province as Alberta battled low oil prices and the startling reality of a new political regime. Downtown Edmonton was booming with $5.5 billion in construction projects in the city’s core. He noted that construction began to slow as 2016 began to draw to a close. The unemployment rate in Edmonton is at 6.9% he says which is far better than the rest of Alberta which is nearing a 9% rate on paper. He believes than number is less because so many people have left the Edmonton area and that there are other employment sectors that are relatively strong. Public service, public education and health care are industries that have remained buoyant in Edmonton. However, Ferguson sees some risk with this going into 2017 because he can see the provincial government cutting back staff as they try to become more fiscally responsive to the economy and that will be challenging for our city.
The picture for 2017
Ferguson thinks the hard times expected for 2016 will hit in 2017 with unemployment figures in the first three months starting to rise. This will also be when employment insurance benefits, extended in Alberta, will start to end for many people and severance packages will also draw to a close. With that will come a lessening of consumer confidence. Actually, Ferguson referred to it as a slight bit of hysteria as people pull back on their spending.
If the price of oil does start to shoot back up towards $100 a barrel, what will that mean for Edmonton’s economy? Will it return to its former glory or has this particular down turn changed the landscape of the capital city? Will we continue to push for diversification, turning away from oil and gas reliance and turning towards other industries like pharmaceuticals, agricultural and digital technologies. Ferguson said these are hard questions and ones that the city will need to address if it looks like oil will make a recovery. Does Edmonton remain oil-centric or continue on a path to less reliance on this industry?
A few bright spots for 2017
Tourism may be a bright spot for the City of Edmonton next year as the country celebrates its 150th anniversary.
Edmonton Real Estate in 2017
While the Postmedia interview with Brad Ferguson didn’t touch on residential real estate, Canada Mortgage and Housing (CMHC) did weigh in earlier this fall with its 2017 predictions. CMHC believes the following will occur:
- New residential construction will increase slightly with single-family homes however, the number of multi-family projects in Edmonton are expected to decrease due to lower demands and higher inventory.
- Resale homes in Edmonton are expected to improve somewhat in 2017, specifically in the second half of the year when it is hoped that the economy will improve. Based on this assumption, there should be a much larger increase in activity in 2018.