So, according the RBC, Albertan consumers are going to spend even more next year. What’s interesting about this article is that they state that inflation in Alberta is 4%, when this report that came out from stats Can earlier this week said it is at 3.2%. I can only assume they are using old numbers, or they are including different information in their inflation calculation.
Consumers to keep wallets open in 2007
Eric Beauchesne, CanWest News Service
Published: Saturday, November 25, 2006
OTTAWA – Alberta, the province least dependent on consumers to fuel economic growth, taxes them the least and will continue to enjoy the strongest provincial growth in retail sales next year, a new report says.
In contrast, Prince Edward Island, the most dependent on consumer spending to power its economy, imposes the heaviest consumer taxes and has one of the poorest outlooks for sales, RBC said Friday.
Ontario and Quebec, meanwhile, will enjoy decent growth next year with spending by consumers in Ontario helping that province narrowly avoid a recession, it predicted.
On balance, RBC expects consumers will help offset the negative impact on exports from the slowdown in the global, and in particular, U.S. economies, plus other economic headwinds like the strong dollar and increased competition from low-wage countries.
"Consumer prospects are strongest out West where provincial tax rates are lowest, wage growth is highest and housing wealth accumulation has been the strongest," it said.
"But even netting these hot Western economies out still leaves the consumer outlook in the rest of the country in fairly healthy shape."
While Ontario’s economy has lost a lot of steam because of the slump in its key manufacturing sector, its service sector remains strong and consumers there will continue to prop up that economy until it makes a healthy rebound in 2008 on the back of a recovery in the U.S., it said.
Quebec and Atlantic Canada will also see a moderation in consumer spending next year but again not enough to undermine their economies.
Nationally, retail sales will rise by 5.2 per cent next year, down from 5.9 this year, RBC said. Sales growth will be led by a 10.1 per cent jump in Alberta, 6.4 in British Columbia, 5.1 in Saskatchewan, 4.2 in Ontario, 4.1 in Manitoba, 3.8 in Quebec, 3.5 in Nova Scotia, 3.2 in New Brunswick, 2.1 in Prince Edward Island, and two per cent in Newfoundland and Labrador.
Supporting strong retail sales growth in Western Canada are a vibrant economy, low taxes, healthy job and wage growth, and increasing real estate wealth, the report said.
Alberta’s economy, already on a tear, currently benefits from the lowest income tax rates, has no sales tax, and has seen the strongest buildup of real estate wealth, along with British Columbia, it noted.
Even after subtracting Alberta’s relatively high four per cent inflation rate from the growth in retail sales, it still holds the No. 1 spot, the report said.
