PROVINCE OF ALBERTA ECONOMIC OUTLOOK 2008 PACIFIC NORTHWEST ECONOMIC CONFERENCE

1. PROVINCE OF ALBERTAECONOMIC OUTLOOK2008PACIFIC NORTHWEST ECONOMIC CONFERENCE

2. THE BOOM IS OFF THE ALBERTA ROSE! • Boom Boom Boom Boom By the Animals • Everything is Beautiful By Ray Stevens • Hurts so Good By John Mellancamp • Flirtin’ with Disaster By Molly Hatchet • I’m Still Standing By Elton John • Truckin’..What a long strange trip its been by the Dead • I Can See Clearly Now By Johnny Nash • On a Clear Day, You Can’t See Forever • Don’t Cry for Me Alberta

3. WHAT HAS HAPPENED SINCE LAST YEAR • The Alberta economy grew by an estimated 6.6% in 2006 • 2007 saw robust growth in the first half followed by slower growth in the second • Final estimates are not yet available, but the consensus is that growth was in the 3 and ½ to 4 percent range. • Alberta’s nominal Gross Domestic Product (GDP) rose in 2006 to an estimated $242 billion, or 17.0% of national GDP. Alberta has 10.4% of Canada’s population. • Going 90 miles an Hour Down a Dead End Street by Hank Snow

4. More about last year • In 2006, net in-migration was 57,000. • In 2007, in-migration continued at relatively high levels, but out migration exploded. • Alberta had a net loss in the past quarter. • The first time in 14 years! • Movement was predominantly to British Columbia and Saskatchewan, but in the last quarter, there was net out-migration to seven provinces. • You say hello and I say good bye By the Beatles

5. Still more about 2007 • The unemployment rate for 2007 was 3.5%, the second lowest in 30 year history • Participation Rate is now 74.5%...the highest ever recorded in Canada. • Alberta’s employment levels grew by 88,700 in 2007, a 4.7% increase. • Everybody’s Workin for the Weekend by Loverboy

6. 2007 and Inflation • The tight labour market placed pressure on wages and salaries, which increased by 11.5% in 2007. Hourly wages increased by 6.2% between February of 2007 and 2008, more than double the national increase. • Alberta’s CPI inflation averaged 4.9% in 2007, up from 4.7% in 2006 and nearly double the national increase. Up By Shania Twain or Money for Nothing by Dire Straits

7. Housing in 2007 • Slowing economic and population growth resulted in housing starts settling to 38,478, a little over 5% lower than last year. • You can’t always get what you want, but sometimes you can get what you need-The Rolling Stones

8. Manufacturing in 2007 • Manufacturing has been virtually flat since late 2005 • Alberta has the fastest growing manufacturing sector in Canada over the past five years…little to brag about! • Hanging Tough by the NKOB or • Nothing from nothing Bill Preston

9. 2007 Investment • Capital investment was over $80 billion dollars in 2007. • It is expected to grow by 3.8% in 2008. • The growth will be driven by energy investments, particularly in the oil sands.

10. Exports in 2007 • Exports in 2007 rose to $80.855 from $77.740 billion. • This represents a 4 percent increase. • Early indications suggest that exports will continue to rise in 2008 despite the strong Canadian dollar. • It will be energy driven • Grease by Frankie Valli

11. The Future-GDP • After the boom in 2007, growth will “settle” with growth in the 3.0 to 3.5%. • This will still be one of the top two or three growth rates in Canada. • The Conference Board sees Alberta leading growth in Canada as far in the future as they look.

12. The Future-Employment • Continued rapid growth in employment. • Growth will be in the 2.0% range • Accelerating employment is expected to being again in 2010

13. The Future-Unemployment • Well, it is what the model says, but • Our most recent unemployment rate is still 3.4 and the drift is sideways or down…not up • The increase can happen only with big in-migration • Do You Believe in Magic by the Lovin’ Spoonful

14. The Future-Housing Starts • This is probably closer to reality • Rapidly increasing prices will force more into rentals • It may be one of the few things to go down in Alberta • And the Walls come Tumbling Down by John Cougar Mellamcamp

15. The Future-Population • Alberta will continue to grow • It will be dependant on the strength of the rest of Canada’s economy • It will also depend on the ability to provide infrastructure in Alberta

16. The Future-Inflation • I still don’t have confidence in these numbers • They will come down • Housing prices have stabilized • If the assumptions on growth are low, so are the inflation rates • Wishin and Hoping by Dusty Springfield

17. So…what happens next • We are going to continue to grow and rapidly. • It will be driven by investment and population growth. • The government will begin putting significant amounts of money into a “rainy day.” • We still do not have a decision on how best to manage growth. • See you with the results in a year!

18. THE KEY ASSUMPTIONS • Oil is $78 in 2008 • Gas drops to $6.75 per gigajoule by 2009 • Canadian dollar remains .95=.99 • Canadian economy continues on a modest growth path

19. OILSANDS INVESTMENT

20. Other things that you can do with Music!? • Hip to be Square by Huey Lewis and the News • Are you Experienced by Jimi Hendrix • It’s my Party by Leslie Gore

21. The Last Slide of 2008 • The last song of the presentation is “The End of the Road” by Boys to Men