Heck Ben, we all look to you for explanations!
My guess as to what is driving the economy; CHINA.
and that countrys' ever burgeoning thirst for raw materials. Maybe not so much directly, but indirectly? for sure.
Oh, and a little of everything else, our usual mix of commodity based industry, maybe even some optimism, when it comes to the oil and gas rumours anyway.
metalman.

1. We are exporting coal again which had been flat for a number of years.

2. Spin off from the oil and gas in AB and the cosruction for the Olympics in Vancouver.

3. The cost of housing in AB and other areas in BC have gone throught the roof. Means more spin off.

4. and like we have always done in PG we start to dream and this is the sad part we are going to overbuild in housing and the market is already flat. How long till the bust is the next question.

So there you have it Ben. Your also in a good position to keep on rolling when the dreamers are in the dumper.

Cheers

After our wood based economy goes down the terlet one day, just watch Victoria camp on the doorstep of Ottawa to get permission to get to that off shore oil and gas. Or maybe 604 will help our economy roll along, just as 250 does now. A�n't life cool?

Whats driveing the economy...Rumours. All to do with oil and mineing. Which you aptly put are ten years away. All the houses in the housing boom are fueling it as well. If they are building lots of houses that means lots of people are going to move here. In the next ten to twenty years yes..Immediately no. You and I have been here long enough to know how Prince George is boom and bust..Some will make money refurbishing an old house. Then selling it at an inflated price. The lucky ones will be the ones that got into it at the beginning. Others will not fare so well..The container sorting yard as you say will employ approx 100 when completed. Other than that what is happeing. Nothing, Sure a new bingo place is going up. The developement on highway 16. Other than that I do not see anything on such a large scale to warrent the sudden rise in houseing. I say wait if you want to buy. Let the houses pass the demand which it is close to. Prices will drop thats A sure thing. Not to the $28,000 level of the sixties. But they will level off to what is fair market value. To sell my house and go out and buy one that costs more is not useing up the new housing it just maintains the status quo there is not one less house to be bought up. I just traded street location...Orca

Consumerism drives the economy. If we only made and bought those things we needed to live a reasonable life we would have figured out a long time ago what to do with our leisure and how to distribute the "wealth".

Instead we make and buy not only those few things we need, but the many things we want. That drives the economy. That is the only way we have been able to distribute the wealth - work for it. The more you work, the more you can buy, the more you buy, the more you work.

We exist to serve each other. Buy shoes from me (forget about the fact that you already have 10 pairs) and I will get money for making them and transporting them and storing them in my retail outlet and selling them to you. No one is interested in repairing shoes, so the cobbler who fixes shoes has disappeared from the face of the earth.

With the money I make I can buy a flat screen TV so I have more room in my living room to dance and I do not have to go to the movie theatre anymore. So, the TV manufacturers are no making TV�s that cost more than they have ever before, even when considering inflation, and the movie theatre owners can make their money by selling tickets at loss leader prices so that they get a captive audience for the snack counter where the real money is made.

If consumers would stop consuming, the entire system would collapse. We have not only been hooked on growth from an increase in products and services, but also from a growth in actual people in this country. There could come a time where the latter will stop, unless we give more people the opportunity to live here, or they become like the Mexicans in the US and simply take the opportunity to live here one way or another. There is a list of countries which will be in serious trouble in the next 20 years because their population is plummeting, unless they learn to live without �growth�.

PG is not isolated. There are people who are buying up property here. How many that is would be interesting to note. On a recent trip we met a couple on the sunshine coast who said that this place is booming and that they just bought some property here they will be coming to look at. They have never been to PG. They expect that property to return big money to them since real estate in the lower mainland is no longer expected to return the percentages it has been doing.

The higher timber harvest has certainly been a driver to now. We may yet see a speculation driver as well. We need to put some meat on that speculation so that it becomes real. That is my concern, no one is making real investments which count in this community, the ones which produce shoes (Asia) and flat screen TVs (Asia). What are our manufacturing plants going to produce?

Maybe we should take a hint from Bill Gates who is not outsourcing to India and China for software development, but to Vancouver which has immigrants from India and China because his country will not allow him to import that workforce.

Its simple. Interest rates and fake money. One look at the money supply and one can see it increasing in excess of 10% a year. The cost to borrow is less then a third of what it was a generation ago, and thus the affordability for things like homes allows for an increase in borrowing power, combined with 50-year mortgages (from 20 a generation ago), and the ability to buy with zero down no interest for a year (compared to 25% down a generation ago).

The simple reality is that market forces dictate that in the long run a society can only spend the wealth it creates, but if it continues to spend more wealth then it creates it is bound to collapse. We will see a collapse and it will be ugly. My generation will be the one picking up the pieces once the baby-boomer have had their cake. We live in the days of live now and pay later generation. The fascists love it because they will own us all in the end. Home flipper, equity financers, and the construction industry are the short term winners.

IMO this fall has the potential to be known in the history books as Black Fall. The housing bubble is about to burst, and that is what has financed the economy over the last few years. Add to that war with Iran and the energy implications; and the reality of globalization; and other countries manipulating their currency; and the race to the bottom with labor and the environment, and things don't look good.

IMO PG faces a huge American housing slow down, which we will feel the impact from after the summer house building season. The American currency is in terminal decline and they face a great depression scenario that is sure to hit us as well. Closer to home we will notice that the Inland Container Port may have long term benefits, but the short term will see job losses in the hundreds in the transportation industry. We have a city government that ignores the negatives on the horizon and is looking for new ways to spend the next generations tax dollars with no consideration of if and how they will be able to make those payment obligations. Some will opt to move to avoid those obligations, furthering the debt load of those that can't leave because they bought their homes in 06-07.

Time Will Tell

What, pray tell do we make here in British Columbia that we export? Trees don't count. Anything else?

Interesting discussion and good points by all, but I would have to agree with Chadermando as to what the end results will be.
The crash IS coming and probably sooner than later.
Owl is also correct in saying that consumerism drives the economy.
It does without a doubt, and that is not even rocket science.
But it is also that same consumerism (also sometimes known as greed)that will help finance the crash when it comes.
An economy can only be considered strong when it can be sustained on a long term basis and I don't see what is happening now as sustainable.
Perhaps more like a quick boom/bust economy,at least for B.C.
There appears to be a lot of bulls**t involved when you look at housing costs,oil and gas prices,food costs etc.that increase with the strong economy/boom.
When comparing those things to wages earned by the average joe with a wife and 2.5 kids,we are fast getting ahead of ourselves.
Can that same guy afford a 1500 dollar a month mortgage payment?
Or in many cases,even more?
Not really, and if he thinks he can pay that over the long term,he is kidding himself.
One glitch and he is toast.
More bullsh**t.
The wages do not justify the prices.
What happens when the interest rates rise and they will rise.
For B.C.what happens after the Olympics which by the way,is a big part of the bulls**t.
I read a burb a while back somewhere that new car sales are dropping in relation to the size of peoples mortgages.They can't afford the fancy wheels anymore with the increase in house prices and costs.
Makes sense to me.
In fact, it is scaring the hell out of me!

I don't like to be a pessimest, but on this question I am. Interest rates, speculation and individuals who feel they have to keep up with the Jones's are the driving factors here. This generation of people haven't seen hard times. Ask someone who lived through the depression. We have no idea what it is like to be without a vast social safety net, and our spending habits prove it.
I believe that when interest rates rise and the banks make their billions alot of people will be saying 'I can't believe we didn't see this coming'.
I for one will not be upgrading to a brandnew 3000 sqft home. I hope to keep the one I have now.
Andy - It scares the hell out of me too.

You got it kitkat!
Fact of life but only hard times will drive that home.
Cheers!

There doesnt seem to be one specific thing that is driving the economy in Prince George. We have a number of things happening simultaneously that makes it hard to put a finger on it.

(1) Planer Mills, and Sawmills in the Greater Prince George area have actually reduced from 3 shifts to 2 or 1 shift and have laid off workers. Some mills are looking to close down entirely or be severly reduced.

(2) Although there is some action in the mining industry it is far removed from Prince George. (a) Smithers Houston area (b) Stewart area (c) Mackenzie area. Some mines such as Huckleyberry in Houston and Gibralter were either closed or closing and are now producing because of the high price of ore. If the price of ore drops, look-out.

(3) Lots of speculation that the City and surrounding area is growing, but in actual fact it is not. The population has remained static for the past 10 years.

(4) A number of people have moved from the 15 to 20 age group to the 25 to 30 age group and these people are building houses, or renting their parents house, while the parents build new, or some such combination, and this of course gives the impression that the City is growing, when in fact it is just people moving from their parents house to a new location.

(5) The same thing applies to new cars. The 10,000 kids that were in the 15 to 20 age group are now buying cars. No change in population but a huge change in the number of vehicles on the road.

(6) Lots of work in Alberta, Prince Rupert, Grande Prairie, Vancouver, has drawn workers from Prince George and created a shortage of workers in almost all areas. This situation has allowed those people who couldnt get jobs before to now be working, and of course they can now buy houses, cars, etc; People who wouldnt be considered for some jobs a few years ago, because of education etc;, are now being wooed by employers.

(7) There are over a thousand houses for sale in the greater Prince George area, and the price is falling everyday. The boom is over. Those contractors who built houses on spec are getting nervous.

(8) $40 Million dollars per year is taken out of the economy by the Casino and redistributed to the BC Government,and Casino Owner. Some of this money is returned through health care, and workers wages, and service groups, but the majority disapears. This is a huge amount of money, and of course the stores who would normally get this money will overtime feel the pinch and some will close down.

(9) The container terminal might create 100 jobs, but it will also get rid of a least 100 and there will be no net gain because of it. This terminal will be in direct competition with the existing warehouses in Prince George, and will virtually destroy any trucking to Vancouver. This will have a devastating effect of jobs, and associated industrie, such as Truck Sales, Tires, Gas/Diesel sales, Restaurants, Garages, etc;

(10) At the end of the day one of our biggest employers are Government, or Government associated workers. Worksafe BC, BC Government, Federal Government, Employment Insurance, ICBC, City Hall, Police, Fire Department, the list goes on. These people are all highly paid, however if we cannot keep working then at some time we will have to evaluate just how much Government we can afford.

I dont think that there is any doubt that the local economy is going to go bust. Its not a matter of if, but of when.

Also well said Palopu!
Too bad there are so many who are not quite ready to see it!
Denial is a very strange thing.
A very important topic!
Regards to all!

The quetion was;"Whats driving the Prince George economy". Not when is it going bust.

I couldnt read all the comments there was to much irrelevant rhetoric.

cheers

The above responses reflect a thoughtful readership, impressive, if a mite pessimistic. Don't you people hear what G. Campbell is saying? 2010 is the future! prosperity for all! Everybody will benefit! Well, maybe not exactly those words, but you get the idea, don't you?
metalman.

We export wine ......

We exported virtually no wine until 20 years ago when GATT opened the market ..

We had only 19 wineries 25 years ago

Now we have over 90 wineries ......

What else do we make now but not to a world class quality? ....

What will it take to improve the quality to sell it world wide?

When can we start shipping it?

Where can we ship it to?

Remember, there were major world players in the wine industry before BC started to compete for a piece of the pie.

BTW, wine is a manufactured good and goes into the 10% of the BC GDP attributed to manufacturing, the second largest sector of which is the processing of food items.

Owl. How many Apple, Peach, Cherry, Plum, Orchards have disapeared during the same period of time????

You pose some good questions, do you have any answers.

We are faced with a short growing season, so we would have to focus on root vegetables such as Potatoes, Carrots, Cabbage, Turnips, etc; We can grow these, and we certainly have sufficient space to have huge farms that could go from Prince George West beyond Vanderhoof. The question is can we market the product.

As it is now we bring in potatoes from Idaho, and Alberta. We bring in Carrots from California, Apples from Washington State, etc; etc; Can we reverse the trend and produce these products here and market them?? Not likely because we are to far removed from the major centres, and therefore transportation costs will kill the project.

We send our cattle to Alberta to be slaughtered and then they ship the meat back here and we buy it. Can we reverse the trend and build a huge slaughter house in the area, and ship the product out to other areas?? A number of years ago there was a rumour going around that there would be a slaughter house built in the Vanderhoof area that would process 300,000 head of cattle, and 500,000 pigs. Havent heard a word on this project for years. It seems they will now build a much smaller slaughter house in Dawson Creek which is closer to the Cattle and Feed.

In any event who knows, maybe someone will come up with an idea.

It's amusing to see how people get off topic here. I believe Ben asked for input on what drives the economy here in Prince George. I had to submit a research paper to the federal government in 2002 on this topic and how it related to the then depressed real estate market in pg at the time. It got me a nice juicy 35K cheque for two months work so I figure I can't be all that wrong...Ben, if you'd like a copy of my study let me know... SO, in a nutshell:

the economy in the Prince George area has been divided into 11 basic sectors: Forestry, mining, fishing and trapping, agriculture, tourism, high-tech industries, public sector, construction, other basic industries, transfer payments, and other non employment income. The abbreviations for the sectors are as follows:
For. Forestry (Including Logging Pulp and Paper Sawmills Other Good Manufacturing Forest Management Related Transportation Construction Etc.

Mining: Mining Including Mining, Mineral Processing, Quarries, Gravel Pits, Petroleum Extraction and Processing.

Fishing & Trapping Fish and Trapping (Including Fish Processing)

Agriculture Agriculture and Food Processing.

Tourism (Including Accommodation, and a Portion of Food Services, Retail Trade, Transportation Etc.)

High Tech High-Technology Industries (Primarily High-Tech Manufacturing, but May Include Some High-Tech Services)

Public Sector Public Sector (Including Education, Health Services, Justice, Other Public Services and Government)

Construction: Construction (but Excluding That Portion of Construction Which Is Driven by One of the Other Basic Industries)

Other Basic: Other Basic Industries (Including Parts of Manufacturing, Transportation, Etc.

Transfer Payment: Transfer Payments (from Government to Individuals: Primarily Employment Insurance, Income Assistance, Old Age Security Payments, Canada Pension Plan Payments)

Other Non Employment Other Non Employment Income (Primarily Investment Income and Corporate Pension Plans)

In Relation to the Prince George Area the Income Dependency Is a Percentage of Basic After-tax Income That Is Attributable to Each Sector.
Prince George Economic Dependency Is 33 Percent Based upon the Forestry Industry.
Prince George Economic Dependency Is 24 Percent Based upon the Public Sector.
Prince George Economic Dependency Is 12 Percent Based upon Transfer Payments.
The remaining is split up between the remaining sectors.

Now if any realtors in this city tell you that the CN container port will take up the slack, well they are just plain wrong. Railway containers and their movement have shown to be more cost efficient (less energy required to move) than traditional trucking. Containers can also haul 4 times more of a load. So, where a hundred or so jobs may be created at the container port, many more may be lost in the trucking industry.
Forestry, because of all the indirect jobs it generates, still drives the PG economy. But considering the forestry industry has lost about 20,000 jobs in the last two decades, it is a trend that will continue due to the mountain pine beetle crisis. And have we all forgot about the softwood tariffs? Not quite as high, but still there.
SO with beetle wood becoming more difficult to get at, and the sudden rise in the canadian dollar and the lesser demand for forestry exports from the US, this has led the big mills to cut back.

Think of a ripple effect: pulp mills will not have wood, which will cause the secondary industries to starve for work and local retailers will starve for buisness. Remember all the for sale signs on george st and downtown not too long ago?
SO, if I may quote a friend of mine: "Forestry is still the big V8 engine that drives the PG econonmy but with all that's happening, its turning into a 4 cylinder."

Whether or not the economy of the city of Prince George will undergoe a cyclical downturn again remains to be seen. To prevent it, would mean the economy has diversified and become less dependent on the forestry industry. Unfortunately, statistics still show that this has not happened and won't happen for a long time to come.

Ben, if you want more, let me know.