Alberta's economic outlook looking up but 'bumpy ride' ahead, says economist

The province's economic outlook is looking good, says an Alberta economist, but we are far from out of the woods just yet.

"It's going to be a bumpy ride," Rob Roach told CBC News in an interview.

Roach is talking about ATB's latest quarterly economic outlook. He is the institution's deputy chief economist.

"Overall, we are forecasting solid gross domestic product (GDP) growth for the province and that's beneficial and it ripples across the economy. It might mean that you are able to find a job but when you go to the grocery store, food prices are getting higher because of inflation. There is a give and take."

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The outlook is predicting real GDP growth of about 5 per cent for 2022, up from 4.4 per cent in a previous estimate, and 3.5 per cent for 2023.

ATB's predictions are based on a North American benchmark oil price of about $95 US for 2022 and $86 US the following year, but Roach cautions those metrics are tricky to gauge.

Roach said Alberta has more or less returned to the pre-pandemic economic levels of 2019, but there's a catch.

"There has been population growth, so on a per-capita basis, it will take until next year (2023) for us to get back to where we were and start growing again. We had a good 2021 and it looks like we will probably lead the country in GDP growth this year, because of those high commodity prices helping give us that extra boost," he said.

"It may not feel that way to everyday Albertans, especially on the inflation and interest-rate side."

To that end, Alberta Central's chief economist Charles St-Arnaud said something to watch out for is what he called the "great consumer squeeze."

"We have a very high level of inflation, especially compared to where wage growth is, which will kind of erode household purchasing power so that that will bring some head winds on consumption."

He adds that Albertans are, on average, some of the most indebted households in the country.

However, overall he expects in the coming months the province will continue to see good growth.

His general concern remains how interest rates will impact the average household when they are expected to increase from one percent to 2.5 per cent.