Todd Hirsch: A Fresh Perspective On Alberta’s Economy

Proving that you can provide economic insights and forecasts WITHOUT using fear to highlight reality, ATB’s Senior Economist Todd Hirsch did an amazing job speaking about the future of the Canadian and Alberta economy in 2015 and 2016 at the recent REIN Commercial and Industrial Conference. Such a good job providing clarity that we have made it our latest episode of the REIN “Real Estate Insider” Podcast.  During the midst of an oil price collapse, federal election rhetoric, and stock market tumble… the perfect time for a dose of reality.  Check out these links to subscribe (For Free) and while there make sure you also download episode 8 “Creating your own personal economy”, something we must ALL do during these times of turmoil. 

The links are in Stitcher (for android etc): http://www.stitcher.com/podcast/the-real-estate-insider and on itunes https://itunes.apple.com/ca/podcast/the-real-estate-insider/id580986927?mt=2 .

By Aaron Hoos

Alberta has long been a land of opportunity. Over a hundred years ago, settlers moved from the crowded streets of Europe to homestead there. Today, Alberta continues to see an influx of immigrants, increasing the province’s population from 3.6 million in 2011 to 4.1 million in 2014. Many REIN Members have capitalized on this land of opportunity with investment properties strategically located in key cities and towns around the province.

But worrisome headlines have lately cast a shadow on this opportunity and investors are wondering if Alberta’s attraction is starting to fade. What should investors do and where can they find trustworthy answers on a topic where everyone seems to hold differing opinions?

Todd Hirsch, the Chief Economist at ATB Financial, sat down recently with The REIN Report to talk about Alberta’s present opportunity and its future outlook, as well as his work as an economist. He shared about Alberta as an investing market and also about how he works to draw his conclusions.

When you think of an economist, you may imagine a solitary figure in an ivory tower, pouring over charts and churning out statistics with a calculator. But Mr. Hirsch defies that stereotype and brings his lively and engaging personality and a fresh energy and perspective to the conversation around the Alberta economy. He takes the lofty, number-dense world of economics and makes it accessible to everyone. Indeed, one needs only look at Mr. Hirsch’s Twitter feed (@ABeconomist) to see how his approach to economics is unique.

The Making Of Mr. Hirsch

“I’m an Alberta boy,” Mr. Hirsch said. His education and career are all centered in this province. He studied for his undergraduate degree at the University of Alberta and later obtained a Master of Arts in Economics at the University of Calgary.

After his studies, he worked at the Canada West Foundation, a research and public policy organization promoting Western Canada. He started there as a Research Analyst, left to work elsewhere, and later returned as their Chief Economist. He has also worked as a Business Analyst at Canadian Pacific Railway and as a Research Economist at the Bank of Canada.

“Then 8 years ago this April, I moved to ATB Financial as their Chief Economist,” he said. While many other economists may fit preconceived notions of what an economist does, Mr. Hirsch has a different approach: “My role looks a little different than some of the other Chief Economists at other banks,” he observed.

He spends most of his time traveling around Alberta giving presentations on the Albertan economy. “I’ll give five to six presentations a week – half to external audiences such as REIN and other industry associations and business, and half to internal (ATB) audiences such as client groups, associates, and senior managers.”

He also spends some of his week talking to media, giving radio interviews, and writing a regular column for The Globe and Mail. And of course there’s the administration – from emails to meeting with his team of analysts, and even a little number-crunching. But, “I don’t pour over statistics as much as one would think,” he said.

The Boots-On-The-Ground Economist

Being the Chief Economist of Alberta’s largest financial institution (and the only crown-owned bank), means that Mr. Hirsch is paying attention to Alberta’s economy for Albertans. It’s a job he takes seriously and he sees the role as one where he can connect with Albertans and talk with them and learn from them. “I have the luxury of being able to focus entirely on Alberta and what is happening here. Other chief economists have more geography to cover.”

Mr. Hirsch is up by 6:00 or 6:30 in the morning and he starts his day by checking for any numbers that StatsCan has released. “StatsCan regularly issues reports broken down at the provincial level; they’re the snapshot of what’s happening in the economy,” Mr. Hirsch explains, “I keep a close eye on retail sales, housing starts, and labour force numbers.” Other data he pays attention to include oil prices (“I try not to check them hourly,” he laughed), the US dollar, and international news that may play an influencing role on Alberta’s economy.

Next on his daily schedule is to write his daily email newsletter, Owl, a widely read email-subscription newsletter.

The he hits the road: “I’m out speaking and doing interviews,” he explained. Often, he spends part of his day downtown Calgary for ATB meetings.

So, while he does pay attention to statistics, he also has the advantage of being in Alberta, talking to the real people who are doing the work and contributing to the Alberta economy every day. “Yesterday I gave a presentation in [the town of] Vulcan and I had the opportunity to talk to 20 farmers there.” This boots-on-the-ground insight helps him balance the conceptual world of statistics with the mindset of the people living and working in the economy.

Economics – By the People for the People

It doesn’t take long to discover that Mr. Hirsch’s approach to the economy is different than most. One might describe him as a conduit – someone who translates hard-to-understand statistics into something that has practical meaning for people.

That is part of the reason why he presents so often, “My presentation style is unique – I don’t use charts or graphs or dense screens of text. I believe PowerPoint is often used for evil not for good.” His presentations are filled with pictures, acting more like a prop and a backdrop than the focal point of his presentation.

The easiest way to hear from Mr. Hirsch on the Alberta economy is through Owl which anyone can subscribe to on the ATB website. He co-writes it with another writer and describes it as “our once-a-day dose of economics about Alberta… it’s accessible; written for regular people,” Mr. Hirsch said. “It takes 60 seconds to read every morning. It’s purposely designed to be read quickly, and there’s always one little graph, which only takes 10 seconds. I often tell people, ‘if you only have 10 seconds to spend thinking about the economy, look at the graph in Owl’.”

Even his book on economics, The Boiling Frog Dilemma: Saving Canada From Economic Decline, released in February 2012, is not like other books on economics. It isn’t a number-heavy snapshot of the economy and doesn’t contain policy recommendations for the government. Rather, Mr. Hirsch focused on themes of creativity and developing new ideas to spur the economy. Relevant to real estate investors, The Boiling Frog Dilemma encourages readers to focus on becoming creative and divergent thinkers, to open their minds about other possibilities. “It’s easy to become focused on just one thing or to fall into confirmation bias,” Mr. Hirsch explained. “But real estate investors have the opportunity to bring creative thinking to their investing, to explore other possibilities, to revisit discarded possibilities, to be open-minded.”

The Pulse of the Alberta Economy

REIN Members know the importance of paying attention to the fundamentals, including the economic situation of the country, province, and local market of any area they choose to invest. Mr. Hirsch’s shared his take on the Alberta economy and what investors can expect in the months and years to come.

“We have lowered our growth expectation,” Mr. Hirsch reported. “2015 will be bumpy year for Alberta. We can’t see the price of our main commodity cut in half without experiencing some pullback, although I’m not forecasting an outright recession. Real GDP growth will be flat or near 1%… The first half of 2015 will be the roughest but my assumption is: the second half of 2015 will improve and oil prices will claw their way higher and that will bring back some optimism and security.”

Beyond oil, there’s other good news: “Forestry and agriculture (especially livestock) could have a record year. And tourism will also do well this year, driven by the low Canadian dollar, the revived US economy, and low fuel prices.”

Looking further into the future, Mr. Hirsch predicted: “I remain optimistic about the growth prospects, driven by the fundamental character of Albertans. Almost by nature we’re an entrepreneurial bunch… During a downturn year, people will be laid off but rather than sitting at home and waiting for oil prices to come back, you statistically see an uptick in self-employment in Alberta. Given the choice, they’re making the best of situation and trying something. I have a lot of optimism about the attitudes of the people here. We have a young population and the people who move here are go-getters, and that will sustain the province for the long term.”

How Real Estate Investors Can Understand Economics

In discussing how real estate investors can understand and use economic information to help them make good investing decisions, his first recommendation was to subscribe to his Owl newsletter as a fast, easy way to get a glimpse into the Alberta economy.

He also advised, “Ignore the newspaper headlines. They often give incorrect perspectives and there’s always a deeper story.” Although he asserted that investors should read the papers, they shouldn’t focus just on the headline. And, “Collect information from a wide variety of sources – especially sources you don’t like. Read people you’re going to disagree with. Different perspectives will enrich your understanding and help to reduce misunderstanding.”

He added: “Look at longer-trends. Never look at one month of data in isolation. Look at 6 months or even 12 months of data to get a sense of what the trend is taking place.”

One of the most important contributions that real estate investors can make to the economy, Mr. Hirsch explained, is to help value property based on real valuations and not emotionally-driven valuations. It’s a reminder that every investor needs to take in their approach to investing – to make decisions based on data instead of emotion.

All Roads Lead Back To Alberta

Mr. Hirsch loves to travel. “I can’t get enough of [it],” he says. “The more I travel, the better.” He has a goal to visit every Canadian province and territory, and when his demanding schedule allows it, he hops a plane to visit other places in the world. He counts Valencia, Spain as his favorite place to visit.

But his heart is in Alberta. “I like the attitude of the people here,” he said. “There’s a sense of energy. In Alberta, “anything is possible. People move to Alberta to start new things – from starting North America’s largest alternative theatre in Edmonton to North America’s largest gay and lesbian rodeo in Calgary. You can do anything here.”

Today, Mr. Hirsch works tirelessly as a fresh, energetic voice that makes Alberta economics accessible for everyday folks – the people he meets and presents to, are the same ones who help to guide his thinking on economics.

And for real estate investors who invest or are thinking of investing in Alberta, Todd Hirsch believes that Alberta is the land of opportunity.

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