Hamilton likely won't see a recession, economist says, and LRT will help

Hamilton's economy will slow to a crawl in the next three years, says one ofthe country's top economists. But he agrees with the mayor that light rail transit (LRT) is the sort of project that will keep the cityafloat.

Brett House, vice-president and deputy chief economistwith Scotiabank, gave Hamilton city councillorsan economic update Friday. He backed up Mayor Fred Eisenberger'sclaim that a planned $1 billion LRTsystem will help Hamilton weather a national slowdown because it will mean jobs and infrastructure investment.

House said it's up to politicians to decide what form that transit investment takes. But spending on infrastructure and the good-paying jobs that come with it will guard against a slowing of Canada and Ontario's economy.

"When the slowing happens, that is exactly the kind of project that can add resilience to the local economy," he said.

House made the presentation as council is hammering out the city's 2019 capital budget. Right now, the budget proposes a 0.52 per cent increase over 2018, or $18 more for the average household.

Some economists have said Canada is about to have a recession. House doesn't think so.

He said the economy will slow to 2.1 per cent in 2018, 1.9 per cent in 2019 and 1.8 per cent in 2020. That means the economy is slowing, but not shrinking.

"Those don't sound like particularly exciting growth numbers," he said. "But that's a long wayfrom going into a recession."

If there is a recession, he said, it will befrom "policy errors"from the Trump administration, including increased protectionism.

Otherwise, Hamilton will be fine, he said. And the economic conditions relatively low interest rates and available infrastructure grants from the provincial and federalgovernments makes it "a propitious time to invest in municipal transit."

Eisenbergermade similar claims about LRTin his inaugural address Monday.

The mayor, a staunch LRT cheerleader, said the project would "recession-proof our community."

The provincial government has pledged to spend $1 billion tobuild Hamilton LRT. City council is still divided on the project, which still has hurdles to clear. Construction is due to start next year and end in 2024.

LRT supporters say it'll boost the economy, create jobs, provide greener and more reliable transit, result in infrastructure improvements and spur development along the corridor, thus generating more taxes.

Opponents say the construction will cause years of headaches, cost the city by falling short of ridership targets, and surrender B-Line transit revenue to a third-party company. They also say the $1 billion would be better spent on other transit and infrastructure projects.

The Ontario PC government halted property acquisitions this fall, but Premier Doug Ford said last month that he'd still fund the project.

House also said Hamilton's housing market is stabilizing after years of sharp increases. That makes economists happy, he said.

The outlook "is positive, but not blow-out-the-lights growth," he said. "What we want is inflation that's moderate, and people being able to plan for the future."

Hamilton can also help itself by making sure its tax rates are competitive, and cutting red tape for developers and businesses.

City staffers are working on their own report about how Hamilton can stay robust over the next three years.

Council will approve its capital budget in January.