The recession gripping Alberta is likely to go down in history as one of the most severe the province has ever endured, according to a report.
The report released Monday by TD Economics says by the end of this year, Alberta's GDP is anticipated to have posted a three per cent contraction in 2016, adding up to a 6.5 per cent loss since the downturn started in 2014.
That's twice the magnitude of the average of the past four recessions to hit Alberta.
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"Alberta's economy can't catch a break," says the report, which was written by deputy chief economist Derek Burleton and economists Diana Petramala and Warren Kirkland.
"The economic fallout from last year's oil price plunge has continued to reverberate through the province so far this year. And just as the global oil market has provided a decent whiff of recovery, the northern part of the province was hit by the outbreak of wildfires in May."
The current downturn — coming on the heels of the one in 2008-09 — is reminiscent of the two recessions Alberta weathered in 1982-83 and 1986, according to the authors.
"In each of these eras, the first of the two recessions … was part of a global economic crisis whereas the second … was more specifically attributable to weakness in the global oil market that delivered a nasty blow to the Alberta economy," the report says.
The current recession is also expected to last roughly two years, which would match the 1982-83 downturn as the longest in the post-war period.
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Labour market stronger than in 1980s
However, when the current recession is considered in terms of its impact on labour markets, it is much milder than the one in the early 1980s, the report says.
The authors predict a three per cent drop in employment from its 2015 peak to the end of this year, when the losses are expected to bottom out.
By contrast, the job losses in 1982-83 were twice the magnitude and the combined effect of that decade's two downturns kept Alberta's unemployment rate near 10 per cent until almost 1990.
Home prices have also taken a much lighter hit in the current recession than they did in the recessions of the 1980s, the report says.
That's partly because Alberta already experienced a market correction in 2010, along with the rest of North America.
"Home prices in the major Alberta markets have shifted into reverse in recent quarters, but the expected drop is likely to pale in comparison to that suffered in 1982-83," the report says.
From 1981 to 1985, home prices in Alberta dropped 20 per cent.
Had it not been for low interest rates, a relatively weak Canadian dollar and economic growth in the United States, Alberta's recession could have been worse, the report says.
"That said … the recovery anticipated in Alberta starting next year is likely to lack the typical punch that has characterized those in the past," it says.
TD Economics is forecasting annual average real GDP gains of about 2.3 per cent for 2017-18.
Alberta still leads country in per capita GDP
Even in recession, after so many years of country-leading growth figures, Alberta is still poised to have much higher GDP per capita than any other province. It's expected to drop this year to $77,000, but that compares with $53,000 in the rest of Canada.
The authors say the strength of Alberta's economic recovery will hinge on how well it tackles the challenges of budget deficits, inadequate pipeline capacity and addressing climate change, among others.
But the province continues to have a competitive tax regime and a young, highly educated workforce "more oriented towards science and engineering than most economies — ingredients that tend to go hand in hand with innovation and diversification," the report says.
"As such, we remain confident that Alberta can retain its status as a leading growth area not just in Canada, but within North America."