Economy Talk from Fallon’s Desk
Every year around Halloween, we can expect two things: ghouls and goblins at the door, and the annual forecast for economic growth.
But what are these forecasts, anyway? A trick… or a treat?
Let’s talk about it.
Following the Conference Board of Canada’s announcement, you can be sure newscasts across the country will be reporting the results. Headlines like “Saskatoon to lead the nation in economic growth” (which we at SREDA love to see) will also appear in interviews, speeches… you name it. It’s almost like economic gospel for the year ahead.
Whether this “gospel” is reliable, though, is another story. Will the year pan out as forecasted? In my opinion, the answer is “maybe.” But if you’re wondering whether Saskatoon can actually outpace its forecasted growth, I’d change my answer to “probably.”
See, the thing about economic forecasts is that they’re like snowflakes: no two are exactly alike. Here’s a look at six recently-released growth forecasts for 2023:
Economic Growth Forecast for Saskatchewan (%)
|Financial Institutions & Organizations||2023f|
|National Bank of Canada||1.0|
|Conference Board of Canada||4.1|
|Average Forecasted Economic Growth||1.9|
From 1.0% to 4.1% is quite the spread. I read this as suggesting a lot of uncertainty about what’s ahead.
Ronald Reagan once said, “I hope you’ll keep in mind that economic forecasting is far from a perfect science. If recent history’s any guide, the experts have some explaining to do about what they told us had to happen but never did.”
Now don’t get me wrong: forecasting isn’t an easy gig, and none of us are expecting it to be a “perfect science,” but it sure makes you wonder why we put so much emphasis on and trust in what these forecasters have to say.
In my opinion, forecasting is a valuable tool, but one we should approach with caution. Here’s why:
Forecasts can be close, but seldom if ever are they exact. This 5-year comparison of Saskatchewan’s forecasted vs. actual growth illustrates my point.
Economic Growth for Saskatoon – Historical forecasts vs. actual
The value in forecasting is actually pretty simple: it’s better to have something than nothing at all. (This is a life lesson I credit to my favourite economics professor, Mr. Kay.)
What’s interesting about forecasts is they often tend to become self-fulfilling prophecies. When we hear—over and over and over—that Saskatoon will lead the nation, we feel proud, confident, and optimistic. This translates into more spending and a bigger, healthier economy.
This ripple effect is just one reason why I think our city will outpace growth forecasts. Another is that I believe forecasters have underestimated the demand (and upward price pressure) for Saskatchewan’s exports and the impacts this demand will have on our small-but-mighty population.
In saying this, I recognize there are many factors outside our control (further impacts of the war in Ukraine, tight monetary policies in Canada and around the world, and China’s economic growth, to name a few). Nevertheless, our city holds the keys to growth, from a provincial budget surplus to immigration growth, investment acceleration, and so on.
For inquiring minds, our SREDA forecast for Saskatoon is 1.2% higher than the Conference Board of Canada’s. I want to know: do you think we can do it? Why or why not? Place your bets, people!
That’s what’s on my mind; let me know your thoughts.