Todd Hirsch calls economic slump a normal cycle that will soon be over

Todd Hirsch, chief economist at ATB Financial, hopes that people will stay positive during this downturn and understand that fluctuations in oil price represent a normal cycle for our province.

“I really kind of encourage people not to be too worried about what is happening right now, not to panic. Not to mean that we shouldn’t make careful decisions, but worry and fear only lead to bad decision making. So I always caution people that although it is unpleasant, this is a normal cycle for Alberta and we just need to bear down and get through it,” Hirsch said in a recent phone interview. Some answers in the following Q & A have been edited for length and clarity.

What is your role at ATB Financial?

I give a lot of presentations about what is going on in the global economy, what’s going on in the Todd Hirsh, chief economist and ATB Financial wants Calgarians to stay hopeful throughout this time of uncertainty.

Photo courtesy of: Phil Crozier.Canadian economy and how does it affect us here in Alberta or wherever I’m speaking. And then the rest of my job, I do analyze what is going on in the economy and I provide some commentary both within our groups at ATB, to give them a sense of the economic landscape and then we also write a daily newsletter called the Owl that comes out every morning.

When did you start to notice that a recession was starting to occur?

A. Well that is a good question, probably around October because oil prices, even in June and July, oil prices were about $110 and then they gradually started to slide to $95 then $90. But by October it was pretty clear that the drop in oil prices was accelerating.

By Christmas time, I think everyone’s attention was on oil prices because they really started to fall much more quickly in November and December. But even by October you could start to feel that things were shifting and changing.{cbrelatedarticle show=”right” ids=”2691,2678,2670″ /}

Do you think this downturn is similar to the one that we had a few years ago?

A. Yes and no is the easy answer. Yes, in the way that this downturn is driven by energy prices. In 2009 we saw energy prices fall even more dramatically and even more quickly. So yes in that fact that what is driving the downturn now is around energy. No, in the way that what was happening in 2009 was a global situation. It wasn’t just energy prices. It was much more of a broad global downturn than what we are seeing now. And that is why I think 2015 will be a downturn for Alberta’s economy, but I don’t think it will be as severe as 2009 because it is really the energy sector that is getting hit. Not everything else.

What kind of advice would you give to a person who is new to Alberta and this is their first downturn that they are experiencing?

The advice that I would give to them is, sort of like the weather — if you don’t like it wait five minutes. In other words, I would really emphasize that what we are seeing now is not pleasant and if you experience a layoff then that is miserable, but this too will end. I think that this recession, or downturn will be fairly short-lived and that by the end of 2015, even by the middle to towards the second half of the year, things will already start to be improving.

bbrezinski@cjournal.ca

Read this Calgary Journal special report for an in-depth comparison between Jim Prentice’s response to the current drop in oil prices and Don Getty’s response in the 1980s.