Case Studies

How Does this Recession Compare to the Last?

A Look at Employment in Edmonton and Calgary

Despite recent drops in the price of oil to back below $50 per barrel, most analysts and forecasters are expecting that 2017 will be the year Alberta climbs out of recession. Indeed, several of the province’s economic indicators began to climb back towards pre-recession levels late last year – this doesn’t mean Alberta is back to where it was before oil prices started dropping in summer 2014, but things are no longer getting worse.

How have Edmonton and Calgary fared during this downturn? In terms of the number of people employed, both cities have performed better than during the previous recession in 2008, but in very separate ways.

In Calgary, while employment dropped at a similar rate in 2015 and 2008, it has begun recovering much earlier this time around and is nearly at pre-recession level. In contrast, the story in Edmonton is quite different from 2008: although during that recession employment in both cities began to fall at roughly the same time, in 2015 employment in Edmonton grew for a year beyond when employment in Calgary started falling. In fact, while Edmonton has recently seen several consecutive months of year-over-year employment declines, total employment barely dipped below its pre-recession level and in the past two months has risen above it.

There are several possible explanations for both the contrast between Edmonton and Calgary and between Edmonton’s experience in the 2008 and 2015 recessions, the most prominent of which is the downtown real estate development boom spurred by the construction of Rogers Place. The arena effect is somewhat supported by the employment data – Edmonton’s twelve months of growth while Calgary was experiencing shrinking employment coincides with a substantial increase in Edmonton’s construction sector employment. However, Rogers Place was not the only major construction project underway during this time, and other factors such as growing public sector employment also contributed to Edmonton’s strong labour market performance.

The marked difference in how Edmonton’s employment situation has evolved in this recession compared to both Calgary and the previous recession begs the question – did the current Alberta recession miss Edmonton completely? The answer is no. While the employment data, from Statistic’s Canada’s Labour Force Survey, show surprising resilience to Alberta’s economic conditions, others such as the unemployment rate, the number of Employment Insurance recipients and economic growth estimates from the Conference Board of Canada paint a bleaker picture.

Finally, although Edmonton’s labour market is not dramatically worse off than it was before the recession began, it’s important to remember that the recession has not necessarily ended either. The end of the 2008 recession came along with a large increase in commodity prices that helped Edmonton’s labour market recover strongly. With the chance of a commodity boom happening anytime soon looking slim, policymakers will be watching how employment in Edmonton and Calgary evolve for months to come.