Thoughts on Edmonton’s Economy

February 13, 2009 · Filed Under Edmonton Economy · 5 Comments 

These are interesting times for economics enthusiasts. Staying current with economic data reports and news stories from Canada and the US seems like a full time job.

Crunching economic data, making sense of it, and then making predictions is complicated and time consuming. I feel it is important to stay on top of the economy, but my first priority are my real estate clients, so I will resist the urge to get too deep into economic theory.

The other day, my attention was brought to an article in the Globe and Mail which painted the economic picture in B.C. and Alberta as catastrophic. I could talk about the blatantly biased tone of the article but what is more disturbing is information that is left out of the article.

The authors report:

“In Alberta, personal bankruptcies soared by 27 per cent year-over-year in the 12-month period ended December, 2008, the Office of the Superintendent of Bankruptcy Canada said yesterday. That was nearly double the 14-per-cent increase for the entire country.”

Wow, sounds bad.. right? Well something didn’t feel quite right about that stat - they didn’t give any absolute numbers. So I thought I would check it out at the source. (See Table 3: Bankruptcies filed by consumers). So here’s the thing: Anytime you start with a small number, it takes a smaller absolute increase to equal a large percentage increase, than it would if the base number was large.

I thought I would compare apples to apples so I decided I would determine the Per Capita Bankruptcy Rate for Alberta and Ontario and then compare them.

What I found was that for the year ending December 2008 even after Alberta’s bankruptcy rate increased for the year, if the populations of both provinces were equal Ontario still had 65% more bankruptcies than Alberta (remember this is per person). Based on recent population numbers, the percentage of the population who filed for personal bankruptcy was 0.2785% in Ontario (36,200) and 0.1685% in Alberta (6,066) for 2008.

Although personal bankruptcy is a terrible experience for the person (and family) of those going through it, my opinion is that employment has a much more significant and widespread impact on an area’s economy.

Based on the latest monthly job stats, Alberta lost 200 jobs while Quebec lost 26,000 and Ontario lost 71,000 (the largest drop in more than three decades). Edmonton in contrast has one of the lowest unemployment rates in Canada at 3.6%.

Prosperity is relative. In the past as other regions of the country have struggled, workers have moved to Alberta for better job prospects.

Is it possible this might continue?

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