Edmonton's chief economist projecting 'difficult year' for capital city

Alberta's incoming United Conservative Partygovernment can do nothing to save Edmonton's economy from what is expected to be a difficult year, says the city's chief economist.

"What we're going to see this year is a very sluggish economy, and quite honestly, I don't know if Mr. Kenney or anyone else could do very much about it at this point," John Rose said Wednesday in an interview with CBC Radio's Edmonton AM, hours after Jason Kenney was named Alberta's premier-designate.

"The bottom line is, the ability of any government to move the needle on the economy is limited and unfortunately, 2019 in particular is looking like a very difficult year for Edmonton and for the province," Rose said.

Rose said his spring projection report, set to be released sometime in the next week, will forecast Edmonton's real gross domestic product (GDP) will grow by 1.2 per cent in 2019.

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That number is drastically different from a quarterly economic report from February in which Rose forecast that Edmonton's real GDP "will decelerate slightly to 2.6 per cent in 2019" after growing an estimated 2.8 per cent in 2018.

"What we've seen in the first quarter of 2019 are relatively weak employment numbers," Rose said Wednesday. "Based on that, I feel it's necessary to pull back the forecast even further."

He is predicting that a glut in housing supply, in addition to a downturn in both residential and non-residential construction, will "ricochet" through the rest of the economy.

"I'm not using any terms like recession but we're going to be bouncing around at one per cent, maybe one and a half per cent growth, and people are going to notice that."

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Rose said that while there is little a provincial government could do to save the city from economic turbulence in the short term, some of Kenney's promised policy changes could do some harm in the years ahead.

A promised cut to the carbon tax would only lead the federal government to impose a "draconian" policy," Rose said.

He said cuts to the public sector that would be required to balance the budget would hit Edmonton the hardest.

Health care, education and public administration positions account for 27 per cent of the jobs in Edmonton.

Working together

Mayor Don Iveson said if provincial government cuts have economic consequences for the city, he'll "have something to say about it."

"The services those Edmontonians provide, particularly in health care and education, aren't just for the benefit of Edmontonians," Iveson said.

"I think the government will have to juggle the need to maintain those service levels for northern Albertans with their fiscal pressures, but those are their decisions to make."

As for how Iveson expects to work with Kenney on those issues, he pointed to Edmonton's city council as an example.

"The 13 of us around the table come from different places on the political spectrum but you'll find we build remarkable consensus all the time," he said. "That is precisely the spirit of working together and finding opportunities, rather than polarizing and dividing."

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Working alongside the regions around Edmonton will also be a key factor.

"You have a political coalition and some strong unity across the 13 mayors. When we stand together to pitch this region to the world or to go to the legislature to articulate our priorities, we are in a much stronger position than when Edmonton was economically and politically isolated in the '90s," Iveson said.

Hereiterated that ultimately, his job is to serve the interests of Edmontonians, regardless of who they voted for in the provincial election.

Slow change

Rose said that's exactly what the mayor will need to do to advocate for the city'sbest interests when it comes to the economy.

"Both Edmonton and Calgary represent huge chunks of the Alberta economy and if Kenney is paying attention, he's going to recognize that fact and realize that Calgary and Edmonton have to be in a healthy position or the province as a whole won't perform well," Rose said.

Even if the incoming premier makes changes that are successful for Edmonton's economy, Rose said it won't change anything in 2019.

"It will be more like 2020, 2021 before we start to see any benefit from changes at the provincial level."