Alberta's purchasing power still struggling to recover

Alberta's purchasing power still struggling to recover

Alberta

Alberta consumers continue to wrestle with relatively limited purchasing power, as the province's households on assistance have doubled since 2007.

Data from the CMHC and the provincial government indicated that the proportion of Alberta households depending on social benefits stood at 3.7% as of July 2019.

This is already approaching the percentage seen in the considerably more inflamed housing market of Ontario, which reached 4.4% during that month.

“The largest part of the increase in the reliance on Alberta Works benefits is due to the recession in the energy sector, which was sparked by the fall in energy prices in 2015 and which has been prolonged by the uncertainty surrounding pipeline construction and approvals for other energy projects,” according to Margarita Wilkins, research associate at the University of Calgary’s School of Public Policy.

“By some measures the recession in Alberta following the 2015 fall in energy prices has ended but for those households forced onto social assistance it shows little sign of abating,” Wilkins wrote in a recent contribution to the Financial Post.

Statistics Canada figures as of Q3 2019 showed that the national economy entered a relative standstill in July after four straight months of growth.

Weakness in the mining, quarrying, and oil and gas extraction sectors were significant drivers in the slowdown. Together, these industries suffered the largest contraction since May 2016, declining by 3.5% in July.

This will likely weigh upon purchasing power, especially in the still-recovering regions hardest hit by the oil price crashes over the past few years. Western Canada will particularly feel the impact, StatsCan warned.