B.C.'s rate of economic growth ranked fifth strongest in 2010.
Resource-based economies such as those of Newfoundland & Labrador (+6.1 per cent), Saskatchewan (+4.0 per cent) and Alberta (+3.3 per cent) led the way in terms of growth.
According to a just released report by B.C. Stats online the pace of economic growth in B.C. was primarily driven by a 5.3 pe cent jump in total personal, business and government spending, with business investment (+13.9 per cent) and consumer spending (+3.8 per cent) spurring much of the growth.
Following back-to-back years of declines in 2008 (–0.9 per cent) and 2009 (–4.6 per cent), spending on durable goods, which includes many "big-ticket items" such as motor vehicles and major household appliances, rose 3.9 per cent in 2010.
While spending on durable goods did recover in 2010, this increase was lower than rates of growth registered during the years leading up to the economic downturn. During the four-year period from 2004 to 2007, durable goods spending rose at rates between 4.1 per cent and 10.8 per cent, considerably stronger than the 3.9 per cent expansion recorded in 2010.
Spending on semi-durable goods such as clothing, footwear and household textiles rose sharply (+5.1 per cent) in 2010, while expenditures on non-durables was up moderately (+2.1 per cent) compared to the previous year.
Despite adverse economic conditions, personal spending on services climbed 2.3 per cent in 2009. In 2010, growth of expenditures on services continued to build momentum, rising 4.2 per cent.
Goods and services purchased by the government sector also rose in 2010, increasing 1.6 per cent during the year.
Total investment by the business sector rose 13.9 per cent in 2010, making up much of the ground lost during the previous year. Investment re-treated substantially (–16.5 per cent) in 2009, marking the largest contraction in corporate investment recorded since the recession of 1982 (–21.4 pe cent).
In the wake of the 1982 recession, business investment continued to weaken, shrinking three times over the course of the following four years. Therefore, compared to the 1982 recession, the current recovery in business sector investment has been quicker.
However, the pace set in 2010 may not remain as strong. Private sector respondents to the Public and Private Sector Investment Intentions Survey (conducted between October 2010 and January 2011) have indicated that spending on non-residential structures will increase only slightly (+4.8 per cent). On the other hand, general economic uncertainty may forestall current intentions or at the very least delay those projects until a time when corporations are more certain to see a return on their investment.
The sovereign debt crisis in Europe, many pundits predict, will make it all but impossible for the region to avoid another economic downturn. Debate now surrounds the length and depth of this recession and the demise of the Euro becoming a very real, however unlikely, possibility.
While the U.S. has seen some positive indicators of late, uncertainty around how best to tackle the level of government debt assures that recovery there will come in dribs and drabs rather than leaps and bounds.
So, while 2010 has been a welcome turning point following a relatively deep recession, the pace of the recovery will likely be slow, as is evident by the fact that the Bank of Canada has repeatedly emphasized the down-side risk.