For Canadians struggling to find an affordable place to live, a look at recent tumbling prices for multimillion-dollar Vancouver-area houses may offer a brief thrill of schadenfreude.

But the falling house prices, along with weakened oil prices, show that Canada's two long reliable economic engines are choking.

According to the Conference Board of Canada, the Alberta economy could actually shrink this year. B.C.-based credit union Central 1 said the same thing about real estate in that province, predicting a 4 per cent drop in prices.

So why isn't the Canadian economy in free fall?

Carolyn Wilkins, senior deputy governor of the Bank of Canada offered some clues among the conflicting signals in her speech to the Calgary Chamber of Commerce on Thursday.

Not exactly buoyant

Today's GDP numbers offer more clues.

But those expecting to feel bucked up by Wilkins may have been disappointed. The talk was not exactly a buoyant explanation of why the Canadian economy did not need interest rate cuts.

Perhaps suffering contagion from Alberta's current gloom, Wilkins' speech was mostly a litany of reasons why the Canadian economy was in trouble.

"There was the drop in oil prices last autumn and there are ongoing transportation constraints, as you well know," she told the Calgary crowd. "Escalating trade tariff actions by the U.S. and China and the related uncertainty that's around that has undermined trade and business investment."

And if that wasn't bad enough for an Alberta audience that has also been suffering a real estate bust, she was not exactly cheery on that subject either.

"Housing here at home — the linchpin in the recovery since the crisis — has slowed sharply."

And there was more. The population was aging. Spending wasn't so hot. The inverted yield curve threatens. Canadians are burdened with red tape. Canada trails competitors in R&D.

"Our read of the speech was still-cautious optimism," said Brian DePratto in a research note from TD Economics after Wilkins spoke.

Wilkins said the lifting of tariffs between Canada and the U.S. over steel and aluminum is a positive sign. (Sean Kilpatrick/The Canadian Press)

There was optimism there, but it had to be carefully picked out from amidst the misery.

Wilkins' main optimistic point was that many of the worries the bank has are temporary. Despite the danger of continuing trade sniping between the U.S with both China and Europe, the lifting of tariffs between Canada and the U.S. over steel and aluminum is a positive sign.

Some of the best news was not necessarily great for an audience that sees so much of its bread and butter in the oil and gas sector that Wilkins saw fading in relative importance to the Canadian economy.

"Recent data that we've seen so far suggests that investment in the non-energy sector has started off the year in positive territory," said Wilkins. "[Digital] economic activities now make up the same share of nominal GDP in Canada as mining, oil and gas combined."

A positive note for Alberta in that regard was that the province had the third biggest digital economy, including within the petroleum sector and in farming.

Also among the signs the Canadian economy is not going to hell in a handcart is employment.

"The labour market has been strong, with solid growth in jobs and steady growth in wages," said Wilkins.

Bouncing back

She said data shows that in petroleum and construction, companies are not laying off workers even if they are not giving them as many hours. It is one more indicator to support the bank's contention that employers are expecting the economy to bounce back.

What she did not say to the Calgary audience was that the oil and gas boom, while an enormous contributor to GDP, was not good for the larger Canadian industrial economy. As oil sales rose, so did the loonie, pricing industrial producers out of their traditional export markets, leading to relocations and bankruptcies.

Businesses outside the main oil-producing regions would not see those heady days return.

Similarly Wilkins's boss, Stephen Poloz, himself has pointed out in the past that while house construction may stimulate the economy, simply bidding up the prices of houses is not necessarily productive use of capital.

Outside the West, house prices may have stabilized. And while the wider B.C. economy remains strong, housing is only going through a "recession" if you compare it to the absurd price rises of the previous decade. Anyone else would call it a brief correction back to something approaching normal, and certainly far from the collapse so many have predicted.

Even Central 1, the credit union predicting this year's 4 per cent decline, says prices will be slightly below flat in 2020, with sales bouncing back. By 2021, sales, prices and housing starts are predicted to resume at a healthy level.

That fits with the overall picture Wilkins painted: Barring horrible trade war fallout, a return to stronger growth, a gradual increase in oil and gas and housing investment — though at a more moderate rate than previously — while the digital knowledge and service economy continues to dominate.

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