Jobless rate 2015 won’t come close to historic highs

THINK OUTSIDE THE BOX:  Even with the expected increase, the rate of unemployment will remain well below the nasty levels seen in 1984 (above 12 per cent), 1993 (above 10 per cent) or even 2010 (above 7 per cent).

Unfortunately, the slowdown in Alberta’s economy this year means the unemployment rate is set to rise. According to the Alberta Economic Outlook (Q2 2015), released yesterday by ATB Financial, the rate of joblessness in the province is expected to rise to an average of about six per cent this year, topping out at close to seven per cent by the summer. That’s far higher than last year’s average of 4.7 per cent.

But before Albertans become too gloomy, some context is necessary. Even with the expected increase, the rate of unemployment will remain well below the nasty levels seen in 1984 (above 12 per cent), 1993 (above 10 per cent) or even 2010 (above 7 per cent).

There are a few reasons why the unemployment situation in 2015 will not be among the worst in Alberta’s history. The first is that the economy is more diversified today than it was in previous eras. Even though it could benefit from even more diversity, Alberta is home to other non-energy sectors that will do well in 2015—forestry, livestock farming and tourism particularly.

Secondly, the global economy was in the doldrums during some of the other periods of high unemployment in Alberta. This was particularly true in the early ‘80s and 2010 when the U.S. economy was in severe recession. That’s not the case today.

Finally, some previous periods of high unemployment were marked by high inflation and high interest rates, which made it difficult for any sector in the province to succeed. Today’s low inflation and interest rates will help support growth and bring about a recovery in the jobs market by 2016.

Watch Todd share a quick summary of the latest Alberta Economic Outlook.

 

Todd Hirsch • Chief Economist            April 1, 2015

 

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