The economy in Northeast B.C. is on the upswing and there's good news on the horizon.
Helmut Pastrick, chief economist for Central 1 Credit Union, was in Fort St. John for a State of the Economy Forum hosted by the North Peace Savings and Credit Union.
Pastrick reviewed a number of economic indicators that have been stabilizing through the region: unemployment rates are down and job vacancies are up; fewer people are receiving employment insurance and offered average hourly wages are up; housing sales and prices are on the rebound, and business incorporations are up.
"I would say that the commodity cycle the economic cycle ... for your region and area generally seems to have run its course," Pastrick said.
"Given the outlook for certainly LNG and natural gas, it does appear the stage is set for another upswing," Pastrick said.
Construction of the LNG Canada project in Kitimat, and the Coastal GasLink pipeline that will feed the facility with gas from Northeast B.C. will help to firm up Canadian natural gas prices, Pastrick said.
With demand increases for liquefied natural gas in Asian markets, "the long-term projections for LNG are very positive," he said, adding that LNG Canada is "a very significant long-term project for more drilling and exploration" in the Northeast.
"The amount of demand we're seeing now will double, triple in the next 20 to 30 years, so additional capacity will need to come on, and very likely will," Pastrick said.
The Northeast is in the middle of the pack when it comes to employment and GDP growth in the province, which continues its strong performance overall. Employment in the Northeast is around 20 per cent higher than it was in 2001, while areas like the Cariboo, Kootenays, and North Coast have seen declines or flatlines.
The province is seeing better performance in service based economies, Pastrick said, and its export performance is lacking as province, as is Canada's export performance as a whole.
"We need to do a lot more to improve that," Pastrick said.
When it comes to lumber and panel prices, a slight downturn is puzzling, Pastrick said, figuring it to be a technical correction despite the softwood lumber dispute and flat housing starts in the U.S.
"As long as U.S. housing starts hold up reasonably well, and I expect they will, this price correction is more temporary," he said. "There's a lot of pent up demand for housing in the U.S. economy still after the financial crisis."
Canadian canola, wheat, and feeder cattle prices have firmed up somewhat, he said.
Looking ahead, Canada's economy is running at full capacity, Pastrick said, and will be faced with higher interest rates. The loonie will hover about where it is now, at 77 cents to the U.S. dollar, he said.
American trade policies and tariff spats under President Donald Trump have had a negative impact on global economic activity, adding costs for producers and consumers, and disrupting supply chains, Pastrick said. The U.S. is focused on biltateral trade deals rather than multilateral deals.
"I guess when you're the elephant, you're the largest economy in the world and you're negotiating with these small countries, there's an advantage," he said. "That's the tactical approach."
The new U.S.-Mexico-Canada Trade Agreement could be worse, and is not much different than the old North America Free Trade Agreeement, Pastrick said. That deal was worth updating, he said.
"Yes, there is some updates, and there should be some updates quite frankly," he said.
"It was signed in 1994, and so here we are 20 some odd years later and a lot of things have changed, on the technology front, digital, products and so forth. There needs to be regular review and updates of these trade agreements."
There are some risks of recession on the horizon, Pastrick said. That could be sprung by the ongoing trade war and escalating tariffs between the U.S. and China, a debt crisis in Argentina, Turkey, and China, a European banking crisis, or geopolitical crisis with North Korea or Iran.
"It's always difficult to accurately predict when the next recession will occur," Pastrick said.
"The track record for economists doing just that is very poor. We have no crystal ball as to when it will happen."
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