Monday, October 16, 2006

Ontario cools down while Alberta heats up

The slipping US economy appears to be dragging to the predominantly manufacturing-oriented Southern Ontario economy, where a high dollar reduces demand for Canadian goods. In an effort to prevent a recession in Ontario, the Bank of Canada is widely expected to keep interest rates the same, but if the province does not respond, then a rate reduction in the next quarter is not out of the question. Of course, lowering interest rates, or even keeping them the level, benefits the Alberta economy and encourages more development.

But what does this mean for Albertans. First of all, service industry woes are likely to continure. There is talk of attracted a further 8,600 workers a year to the province, but even this appears to fall short of the current demand. The extent of the service industry crunch has yet to be measured, but it has translated into a 33% jump in business complaints to the Better Business Bureau over last year alone.

Similarly, the traditional migrant to Alberta is young and single, so recent news headlines claiming that Calgary now has the most vehicles on the road in its history are likely to be true. At the last comprehesive measure, in the early 1990s, vehicle occupancy rates were 1.1, so Calgary is clearly not a carpooling city. In many areas of the city, "rush hour" traffic starts to accumulate by mid-afternoon, 14:30 -15:00, and on certain roads, Glenmore Trail or 16th Avenue North, it never really stops.

Furthermore, all of this traffic is just second-fiddle to the oil and gas industry which is awash in new project developments. Recent measures announceed by the government to deal with Clean Air, are unlikely to help reduce Alberta's claim to worst provincial polluter.

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