What can the Stampede tell us about Calgary’s economy?

Posted by: Kaitlyn Mason on June 28, 2017

In this blog, our Economic Policy Analyst, Franco Terrazzano, details the relationship between the Stampede Canvas Auction results and business confidence in Calgary. Read on to find out what the auction results can tell us about the current state of business confidence in Calgary. 

Over the last 105 years, through thick and thin, the Calgary Stampede has continued to contribute to our city’s economy.

In 1912, Stampede’s first rodeo show brought $120,000 in economic benefits to Calgary – equivalent to roughly $3 million dollars in 2015. As the Stampede has continued to grow over the last century, so have its contributions. Estimates suggest that the Stampede now provides as much as $400 million in annual economic impact to the province of Alberta, with the majority of that spending supporting local hotels, restaurants, retail shopping, and many other businesses.   

While providing a great source of economic benefit, the Stampede also provides a good indication of how our economy is doing.  

More specifically, the Chuckwagon Canvas Auction is a good indicator of the business confidence in Calgary.

The background

Before the fan-favourite chuckwagon races begin, potential sponsors gather in March to compete for advertising space on each wagon. Generally speaking, the more money spent during the tarp auction, the better off Calgary’s economy is. 

Yearly changes in Canvas Auction results, GDP, employment and the price of oil are all closely related, and tend to experience similar patterns of growth. This is illustrated in the figure below.

Stampede graph new.png

Source: Real gross domestic product, expenditure-based, by province and territory Statistics Canada, Table 384-0038.
Labour Force Characteristics, Statistics Canada, Table 282-0135.
OK WTI Spot Price FOB (USD per Barrel), Energy Information Administration.
Global News, “2016 Calgary Stampede Chuckwagon canvas auction held Thursday.” Calgary Stampede, 2017 Canvas Auction Results. Data accessed May 30, 2017. Calgary Chamber of Commerce calculations.

One observation worth mentioning: It appears that between 2012 and 2014 variables other than the price of oil experience significant growth.

However, because the price of oil was hovering around $100/barrel, there should be no surprise that other variables experienced significant growth, while the price did not.

What the 2017 Canvas Auction results tell us about Calgary's economy

This year’s results paint a fairly accurate picture of the current state of our economy. 2017 marks the first year – in the past four years – where total bids surpassed the previous year's total. In fact, the 2017 auction brought in $123,000 more than last year.

However, while the Canvas Auction saw a year-over-year increase, total bids remain below the average receipts of the last decade.  

Like the Canvas Auction results, the economy is also expected to see modest growth. In fact, Alberta is expected to experience real GDP growth for the first time since 2014. While growth will remain modest, likely around 2 percent, after a few years of painful downturn, recovery finally appears to be looming over the horizon.  

The increase in this year’s tarp auction is strongly related to greater business confidence in the price of oil. It’s unlikely that we will be seeing $100/barrel return in 2017, however, the average Q1 price of oil (WTI spot price, USD) saw a 55 per cent increase over last year. While full recovery is distant, the relatively higher price of oil has triggered an uptake in business confidence and economic growth.  

Unfortunately, while business confidence, the economy, and the price of oil have all seen increases, significant strides in the labour market remain unlikely.

As of May, Calgary’s unemployment rate remained at 9.3 per cent, higher than any of Canada’s ten largest cities. While the unemployment rate will likely remain high, some job and income growth is forecasted for Calgarians.  

So, while we may not be out of the woods yet, there appears to be a sense of optimism among Calgary business leaders. And after a few years of difficult times, economic growth – while modest – is definitely worth celebrating. 

Franco Terrazzano is an Economic Policy Analyst at the Calgary Chamber.