Could saskatchewan be heading into recession? According to a recent poll, more than half of Saskatchewan residents think so.

Oil prices have dropped by more than 55% in six months, directly affecting 10%-15% of the provincial economy. Estevan, in the heart of the oilpatch, has seen its vacancy rate spike from virtually zero to 12.5% in one year. Layoffs are being reported by some oilfield-services companies as large producers chop capital and operating budgets for 2015.

Premier Brad Wall recently admitted the province is expecting a $600-million to $800-million shortfall in revenue in the 2015-16 fiscal year, a 7% reduction.

There are other signs of economic weakness. January’s jobs numbers showed a year-over-year decline of 1,200 jobs from January 2014 and a steep drop of 8,400 from December. While one month of bad job numbers does not a recession make, it is a troubling sign of things to come.

Housing markets have been slowing, with housing starts forecast to fall to 7,300 units in 2015 from 8,260 in 2014. Large inventories of unsold new and resale homes continue to weigh on the market, causing prices to flatten or even decline in some cities, including Regina. Manufacturing sales were down by 4% in December, the largest monthly decline among the provinces, reflecting the impact of lower oil prices on the value of refined petroleum products.

The slowdown (due largely to normal crop production last year after harvesting the largest crop in Saskatchewan’s history in 2013), which is exacerbated by plunging oil prices, hearkens back to 2009, the province’s last recession.

Oil prices, which peaked at US$147 a barrel in July 2008, plunged to a low of US$30 by early 2009. Other commodity prices followed suit, including natural gas prices (off by 51%) and grains and oilseeds (falling 15%- 20%). Potash prices remained high, but met buyer resistance, resulting in mine shutdowns and thousands of layoffs, further exacerbating the economic slowdown.

Not surprisingly, the province’s economy shrank by 5% in 2009, reflecting the impact of low oil prices, the global financial crisis and global recession. So, will history repeat itself in 2015?

Although there are similarities with the 2009 recession, there are significant differences. As Doug Elliott, publisher of Sask Trends Monitor, a monthly statistical newsletter, points out: “The world economy is different this time around.”

Rather than heading into a two-year slump, the U.S. economy is growing strongly. Oil and natural gas prices are weak, but not all commodities are down. The grain transportation backlog, which cost western farmers $5 billion in lost sales and income in 2013 and 2014, is slowly being whittled away.

Saskatchewan’s economy is not as dependent upon oil as Alberta’s. And with the lower loonie, Saskatchewan’s commodity exports, which are denominated in U.S. dollars, should be OK.

All of which suggests that unlike Alberta, Saskatchewan will not go into recession in 2015.

Still, hard-bitten Saskatchewanians have their fingers crossed.

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