May 11, 2020 via ZOOM: Todd Hirsch, Vice President and Chief Economist for Alberta Treasury Branches Financial. website
Our guest Speaker, Todd Hirsch, chief economist at the Alberta Treasury Branches, was introduced by Don Edie. Todd spoke of the current economic and life situation by highlighting the following.
What we DO know:
- Covid 19 is unprecedented in its impact and is wreaking disruption of proportions we have not ever experienced. This surpasses the impact of the great depression, the Spanish flu, SARS and anything else ever. WE are unsure how deep, how long and how impactful this pandemic will be on our daily lives, livelihood and life after COVID.
- The oil war between Saudi Arabia and Russia has created major problems where West Texas oil dropped to a negative value for the first time in history. It has bounced back to $25 per barrel, which is only half the sustainable value per barrel in Albertan economic terms. We ask how Alberta is going to weather this situation and what the future may hold for us?
- The government is pouring money into the economy through quantitative easing, subsidies and handouts and this is a different approach from that of the great depression. We ask who is going to pay for this and in what form?
- Stock markets are extremely volatile and have shown roller-coaster style action in the past weeks. There are opportunities and there are pitfalls.
- This pandemic does not discriminate on any socioeconomic basis, but the most hard hit are those on the front line; the essential workers and the minimum wage earners that have no option but to keep working despite the risks. Do we need to evaluate this experience and consider some social safety net for the future, such as a guaranteed income?
What we do NOT know:
- When will physical distancing restrictions (this, rather than social distancing, is the correct term) will be lifted.
- When (not if) the second wave will hit us.
- How long energy prices will remain as low as they are currently. It looks like oil prices may stay low for up to two more years.
- The macro economic impact of COVID on the labour market is quite severe currently: 13.8% and may rise to as high as 20%
- How consumer behaviour may be impacted and altered after this period of lockdown. The impacts will affect such industries as the airlines, restaurants, mass gatherings, hotels, the leisure business, all-inclusive hotels in the Caribbean and cruise liners.
- We are headed for a nasty recession in Alberta. Todd repeated the word, “nasty” which sounded most ominous to all present, so let’s brace ourselves for a rough ride in the near future.
- The communications and technology fields will grow and thrive. Alberta is not in the tech belt, but there is hope for this area to be developed here.
- Local may trump global enterprise in such areas as agri-business and small business. The global supply chains have their value, but have demonstrated some shortcomings which we will need to address, adjust and accommodate, even at a premium.
- Health care technology and consumables may grow and thrive. This will again be in specific areas such as protective equipment and services.
- New delivery methods may change the way we shop and entertain ourselves. Consulting services that address “virus-proofing“ businesses and buildings may have great value.
Todd suggested we are in for a deep recession in the 7%-11% scale and this is double our worst previous experience with economic downturns.
Questions were asked and then Gerry Meek thanked the speaker for an enlightening and realistic picture of a (very gloomy) situation.
reported by Saadat Keshavjee