KELOWNA, B.C. – It may not have achieved the lofty numbers of the real estate sector, which grew by 23% in British Columbia this past year, but the trucking industry still saw some steady growth, up over 5% in 2015.
During a speech at the BC Trucking Association’s (BCTA) annual AGM Meeting and Management Conference in Kelowna, BC April 10-12, Ken Peacock, chief economist and vice-president for the Business Council of BC, told conference attendees that the trucking industry in Canada’s most westerly province was doing quite well.
“In this post-recession environment – 2010, 2011 onwards – the growth of the trucking industry has outpaced other industries,” Peacock said. “From these numbers that economists looked at, it would appear to be a good-news story for your sector.”
Peacock underscored this point by calculating industry averages in growth from 1997 to 2014, and found that the trucking sector in BC had grown by 3.3% over that period, ranking it 21st on the list of all industries in the province.
“Often in this province you hear people say that the future is all high-tech and all knowledge-based industry and we can’t continue to develop resources, and that’s not at all the story,” Peacock said. “The resource industry is part of the mix and part of BC’s success, as well as high-tech and knowledge-based industries. I absolutely despise that narrative that it’s an either-or; to me it’s a both.”
One of the impending challenges facing every industry in Canada, Peacock said, is an aging population.
Peacock said that in 1995, there was 23 retirees aged 65 and over in Canada for every 100 working age person (aged 25-64), and that that number had climbed to 31 in 2015, is expected to reach 40 by 2025 and 48 in 2035.
“It really does raise a lot of issues and a lot of questions,” he said. “How is government going to pay for a lot of health care services that we will need with the aging population, as they are the most expensive? Where are we going to get workers? Immigration is going to feature prominently. Companies are going to need to retain and keep workers. It really is going to create challenges.”
Peacock said he believes companies would see the issue of an aging workforce really start to have a negative impact on finding employees by 2023.
In the face of an overall downturn in the Canadian economy, Peacock said the takeaway message of his presentation was that BC was doing comparatively well to other provinces.
“We are leading the country and there are a number of reasons for that,” he said, “including the crazy housing market in the Lower Mainland, which is difficult to understand or make any sense of.”
On a global scale, Peacock said that since the ‘financial meltdown’ last year, when the price of oil collapsed, international organizations have repeatedly downgraded their forecasts for the world economy.
He pointed to several global events that have had a negative impact on the economy, including the downturn in China’s markets and the country’s increasing debt loads, the possibility of the United Kingdom leaving the European Union and even the prospect of US Republican nominee Donald Trump becoming the next president.
Peacock said the US economy is presently ‘chugging along,’ and that the growth was attributed to more people going back to work, housing markets recovering and consumer spending increasing. He did, however, point out that it took about six years for the American economy to get back to the level it was pre-Great Recession, and that in today’s economic times, slower, steadier growth would likely become the norm, as opposed to the rapid inclines some countries, like the US and China, have seen in the past.
Peacock said there continues to be low demand for housing in the US, and cited a report indicated that many 30-somethings are continuing to live with their parents, but eventually they would be looking for their own housing, which would eventually boost demand.
Highlighting specific American economies, Peacock said focusing on the US was important, not only for Canadians, but also countries worldwide, as the sheer size warranted the attention.
Examples included the New York City economy, which is same size as Australia’s; Long Beach/Los Angeles equals the Netherlands; Chicago is the same as Nigeria; and Houston is equal to Taiwan and twice the size of BC’s economy.
“We’re a small, open trade economy,” Peacock said, “and the fact that we’re less than half the size of Greater Houston kind of underscores that we are rather small on the global and North American context.”
Despite Canada’s size, Peacock said coming out of the Great Recession the country did the best of any developed nation in the world in average GDP growth, but then, following the collapse of oil prices last year, fell off.
“That really is why Canada is struggling to find a stronger economic footing.”
In the short-term for economic growth, particularly in BC, one concern Peacock accentuated was housing costs, and more specifically, household debt, which is high amongst Canadians, even higher than it was with Americans when the US suffered its downturn in 2008.
Peacock said when looking at Canadian’s debt relative to personal disposable income, the current debt ratio is 167%. When the Great Recession hit the US in 2008, American’s debt ratio was around 144%.
“Mercifully, interest rates are low, so it’s manageable,” Peacock said, “but you’ll hear the governor of the Bank of Canada talk about one day, interest rates, are going to start to edge up.”
Peacock added that he believes interest rates would remain low for a few years to come.
The BC economist did say that he anticipates a housing slowdown, especially in Vancouver, where he said the current pace can’t be sustained.
Some positive factors for the Canadian economy Peacock pointed out included federal stimulus spending on infrastructure, US growth, gains in non-energy exports, low interest rates and the low Canadian dollar, which helps with exports.
“We cannot overstate the effect of the impact the low Canadian dollar has had on the BC economy and Canada in general,” he said.
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