THUNDER BAY, ONT. — The results of the 2022 edition of the Thunder Bay Economic Activity Index have been released by Thunder Bay Ventures.
The group commissioned the study to reflect the reality of Thunder Bay’s economy and advise the community about changes in economic activity.
The report was prepared by Camillo Lento and Braham Dadgostar, professors in the faculty of business administration at Lakehead University. They examined major factors that signal changes in Thunder Bay’s economic activity, which include total employment, retail sales, unemployment rate, average resale home price, and affordability of housing.
The study revealed that although Thunder Bay’s economy rebounded in 2021 from the 2020 pandemic lows, compared to the Ontario Economic Activity Index it continues to lag behind the provincial economy, which has already recovered to pre-pandemic levels.
The report also determined that Thunder Bay will face risks during its continued economic recovery in 2022 and 2023, from the Bank of Canada’s tightening financial conditions and rising interest rates to combat high inflation and an economic recession expected in 2023.
Livio Di Matteo, professor of economics at Lakehead University, says city council needs to make use of all the economic expertise that it can, and that this report is a portion of that expertise.
He added there has been surprisingly little discussion of the economy in the election campaign primarily because the local economy is “still rather flush” with stimulus money from assorted government initiatives.
“This will not last forever, especially given that the economy may be moving into recession,” he said.
Di Matteo outlined some steps or recommendations that the new Thunder Bay city council should consider taking to strengthen the local economy and foster economic development.
He said city council needs to ensure the City of Thunder Bay develops a reputation for efficient delivery of public services and infrastructure projects based on outcomes rather than virtue signalling.
“At present, projects take longer to complete than necessary and are very disruptive to local businesses and residents,” he said.
Secondly, he suggested that city council will need to be “more competitive on the tax front” which will require providing its existing services with fewer employees in order to “hold the line” on taxes.
In a third and important step, Di Matteo says the city council, together with the help of federal, provincial and Indigenous governments, needs to effectively tackle issues of poverty, homelessness and crime that deter attracting business to the city.
“City economic development marketing strategies should focus on sectors with the most growth potential and these include tourism, mining and transportation,” he said as his fourth recommendation.
The new council needs to cut red tape and facilitate quicker approval for building and business projects as well, he added.
In Di Matteo’s sixth recommendation, he says council needs to address the potential for the next out-migration wave which centres around the senior population.
“People in the 50 to 65 age range are currently thinking about where and when they will retire, and in looking forward, many may decide Thunder Bay is not the place to retire given the outmigration of children, lack of affordable and quality apartment and condo housing as well as relatively poor performance on things like snow removal for those who wish to remain in their homes,” he said.
“The mantra that you can retire and stay in your home and get services is aspirational in Thunder Bay given that residential services take second place to government contracts and large business projects for many providers, resulting in relatively high-cost services.”
Additionally, the Thunder Bay Economic Activity Index study showed Thunder Bay housing affordability improved slightly during the pandemic as increases in per capita income exceeded rent increases.
There was an economic recovery in the city’s job growth rate, which in 2022, has resulted in employment reaching historical highs, with broad-based gains in most industries aside from accommodations and food and other services. Unemployment rates in 2022 are also well below historical averages, which the report suggests may result in labour shortages and upward pressure on wage rates, barring a recession.
Although lagging behind provincial trends, Thunder Bay’s retail sales are almost back to pre-pandemic highs.
Sandi Krasowski, Local Journalism Initiative Reporter, The Chronicle-Journal