The economy in Alberta looks good — from a distance — where record immigration has led to a jump in consumer spending, but when you shine a brighter light onto it, there are some problems a GDP fails to measure.
“We didn’t have the famous two quarters of contraction that would normally characterize a recession,” Charles St-Arnaud told CBC News in a Friday interview.
“But when we look under the hood, we realize consumers, individually, are actually reducing their spending.”
So in his latest report for Alberta Central — the lobby for credit unions in the province — St-Arnaud calls it a “me-cession,” rather than a recession.
“In the aggregate, with the record population growth we have had over the past year, there are more consumers consuming even though they are consuming less per head,” he explained.
“That means overall the economy is still growing. But if you were to ask the general public, they don’t feel great about the economy. They feel like we are kind of in recession even though the official data is not saying it. That’s why I say the me-cession. You feel a recession, you are constraining your spending, but it’s not being shown in aggregate.”
But not everyone fits into an economic model.
Meaghon Reid is the executive director at Vibrant Communities Calgary. She said the report does not cover a sizeable chunk of Calgarians.
“It seems to me this report is looking at people who can adjust spending. Maybe they don’t go out to dinner as much, or maybe they don’t buy new clothing all the time,” she said.
“But if we look at people with low income, they are pretty maxed out, increasingly maxed out in terms of just spending on basic necessities.”
That commonly described scenario of having nothing left over after paying rent and utilities is a real thing, she said.
“They are also spending higher rates on things like electricity and insurance, because those are only going up in this province. We have the biggest wealth gap in this province than the rest of Canada. We are putting both of those groups in the same analysis,” Reid said.
“People who are using every single cent and often going into debt to cover their basic needs don’t get considered in this kind of report and don’t often get considered from a policy perspective, so this might not reflect the desperation of the situation.”
A business group economist says overly broad metrics, like gross domestic product (GDP), fail to measure stories below the surface.
“We are very much obsessed with indicators like the GDP, which of course have their usefulness, but they are very broad aggregate indicators, so it masks a lot of different stories that are happening at the same time in the economy,” Simon Gaudreault at the Canadian Federation of Independent Business (CFIB) told CBC News in an interview.
“If you look at things on aggregate, it may look like we have escaped a recession, but per capita when you factor in or factor out the impact of immigration, the picture looks a little less rosy.”
A better way forward for the members of CFIB would have government listening to more voices, he said.
“It’s not an economy that is perhaps as strong as some would like to believe, and I think we should pay closer attention to different signals, including this report, data from CFIB, and other sources that show we are not out of the woods yet.”
Alberta’s population increased by more than 202,000 over the 12-month period ending Jan. 1, 2024.
Source Agencies
