The tumble of oil and other commodity prices continues to weaken the Canadian dollar, which posted a new 11-year low on Tuesday, Dec. 8.
The Canadian dollar finished the trading day at 73.6 cents compared to the U.S. dollar, its lowest level since June 2004. With oil prices bouncing around just under $40 a barrel and a strengthening U.S. dollar, the loonie continues to be hit hard, dropping 14 cents in the past year when compared to the American currency.
The Canadian dollar is expected to remain weak, possibly staying below 80 cents through 2017, according to data provided by Chris Lawless, chief economist at British Columbia Investment Management Corp. in Victoria. Lawless presented his forecast Tuesday at U.S. Bank’s 26th Annual Economic Outlook Forum at the Bellingham Golf & Country Club. He said the loonie could get as low as 70 cents to the U.S. dollar but he doesn’t expect it to fall much further than that before stabilizing and eventually strengthening.
The U.S. is leading the train in global growth.
Chris Lawless, B.C. economist
Typically a weak Canadian dollar means a slowdown in the British Columbia economy, but the outlook is decent for 2016, and B.C. could be the leading province in terms of economic growth, Lawless said. Even so, the projected gross domestic product growth for British Columbia is 2.4 percent, slower than the 3.2 percent average annual Canadian increase over the past 50 years.
British Columbia should benefit from having the U.S. as a major trading partner, as well as better export revenue because of the weaker loonie.
“The U.S. is leading the train in global growth,” Lawless said.
As for Whatcom County and the U.S., the economy is expected to continue its slow but steady recovery from the 2008 financial meltdown. Despite the weaker Canadian dollar, Whatcom County should be on a growth path similar to the state and the U.S. in 2016, Hart Hodges said at the economic forum. Hodges is the director of Western Washington University’s Center for Economic and Business Research.
Hodges was more pessimistic about job growth in Whatcom County, given the recent announcements of the closing of Bellingham’s CH2M Hill office, which will eliminate around 120 high-paying salaries, as well as the shutdown of the aluminum smelter facilities at Alcoa Intalco Works in early 2016. The smelter shutdown is considered a curtailment, laying off 465 workers while keeping about 100 for its casthouse operations.
Hodges expects employment growth in Whatcom County to be around 2 percent in 2016; however if the smelter remains closed throughout the year, combined with the elimination of the CH2M Hill jobs from the area, it could end up being more like 1.7 percent growth. In October, the number of nonfarm jobs in Whatcom County increased 4.4 percent compared to a year earlier, according to the state Employment Security Department.
The U.S. Federal Reserve is expected to raise interest rates soon, possibly this month because it is reasonably confident the national economy is back on track. The national economy should expand in the coming year while low energy prices are expected to continue, said John Mitchell, former chief economist at U.S. Bancorp. At the Bellingham economic forum, Mitchell said the recent national job numbers provide a bit of optimism, with the unemployment rate expected to be in the 4.7 percent range next year.