Posts from — March 2009

One quarter of British Columbians expect their personal financial status to improve next year, according to yesterday’s Mustel Poll, reported on page D2 of the Vancouver Sun. Only 16 percent foresee a decline in personal income and a full 56 percent expect no change.

Scotia Economics, however, is predicting the BC economy will contract by two percent next year, according to a Sun story two pages later. Central 1 Credit Union chief economist Helmut Pastrick is even gloomier, claiming declining construction spending will force BC to the “first nominal decline in its economy since 1961.”

That contraction will a serious hit for the 16 percent expecting a decline in personal income, if they take it all themselves. Perhaps they’ve been spending too much time thinking like former Bank of Canada president David Dodge, who tells the Globe that “Canada  and the world are facing a long and deep recession that will fundamentally alter the nature of capitalism.” Or perhaps they have it right and the rest of the Mustel respondents are dreaming.

The continuing turmoil in the economy is bound to have a ripple effect across the city. I forecast an expansion of the underground economy in this column published in this week’s edition of Business in Vancouver.

Last month’s post about the steep decline in Vancouver building permits occasioned a mild media frenzy. Today, the sequel: February numbers that show a continuing downward trend in the value of the permits, despite a small uptick in the number of dwelling units started in February 2009 (275) compared to the same month a year ago (190).

The value of the month’s permits declined, however, to $95.2 million from $108 million a year ago. The cumulative value of permits is down about 30 percent in 2009 to $134.4 million from $193.4 million last year.

BC retail sales as tracked by Statistics Canada to January 2009, part of a BC Business Council presentation to the VEDC's Quarterly Dialogue.

The quarterly economic dialogue organized by the Vancouver Economic Development Commission March 10 for Mayor Gregor Robertson, councillors and VEDC board members was not for the faint of heart.

Ken Peacock, economic research director for the BC Business Council, showed charts of recent economic activity that looked more like the crash of a falling plane than the steady upward trend expected in the “best place on earth.”

The cliff-like drop of building permits is familiar news; new to me was the drop in retail sales tracked in the table below, dropping farther and faster than any time in the past decade.

Although Peacock and VEDC economic John Tylee expect Vancouver to weather the storm, in part because of its diversified economy, both see 2009 as a very difficult year. Unemployment is now accelerating. Remove the stimulus of the 2010 Olympic Games and the outlook is bleak, with little prospect of renewed growth until 2010 at the earliest.

In the meantime, Peacock sees exports declining and fewer foreign visitors. Freight through the Port of Vancouver is already 10 percent below last year’s levels. As he put it, the “engines of growth are stalling.” The VEDC expects to post all the presentations here by mid-month.