DAVOS 2020

Economic Confidence: Canadians, the Economy and the Government
By Tony Couslon
Group VP Corporate and Public Affairs - Environics Research

Economic growth in Canada in 2020 is expected to be modest, limited by uncertainty about a range of domestic and global events. This outlook follows a year of similarly constrained growth for the Canadian economy in 2019.

Recent public opinion research has found Canadians duly cautious in their behaviour and expectations. In 2019, while only about one in four Canadians believed the economy to be in recession, over half thought a recession was coming in the next few months. Four in ten agreed that conditions were the worst in their lifetime; and a similar proportion were of the view that the national economy was weakening rather than gaining strength.

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Watch Tony Coulson take a closer look at the Canadian economic perspective with data from our recent IRIS Global Confidence Study

In keeping with this sense of weakening economic prospects nationally, many Canadians report caution at the household level. Three in ten expressed concern about a potential job loss, and one-third were finding it harder to make ends meet. Consequently, six in ten reported spending less on food, half were giving less to charity, almost four in ten were spending less on clothing, and one in ten had cut back on needed medication.

How do these figures compare to Canadians’ attitudes and self-reported behaviours the last time the economy was in recession? The country endured its last recession from September/October 2008 through to June/July of 2009. In early 2019, we asked a sample of Canadians the same series of questions we posed in our 2009 survey.

Perceptions of the state of the economy were considerably more negative in 2009. About seven in ten felt the national economy was getting weaker, over half believed the economy to be in recession, and another third thought a recession was on the way. More than half felt conditions were the worst in their lifetime.

Although Canadians overall tended to view the economy as weaker in 2009 than today, they expressed greater confidence in the government’s handling of the issue. In 2009, about one in three believed government was doing enough to address the economy, compared to only one in five in 2019.

While the public expressed greater pessimism about the economy overall in 2009 than in 2019, at the household level, public sentiment was fairly similar: in both years, about three in ten expressed concern about a potential job loss, and roughly the same proportion said they were finding it harder to make ends meet.

Reported cutbacks on spending, however, were less pronounced in 2009. About three in ten reported spending less on food, four in ten gave less to charity, half spent less on clothing, and just over one in twenty cut back on needed medication.

According to a 2011 analysis by Philip Cross, Canada’s 2009 recession wasn’t as brutal as prior Canadian recessions – or as bad as the experience of other countries during the same period. Cross attributed this gentler ride to household spending, among other factors. Canadian households were in relatively good financial shape going into the recession, and so were able to continue spending.

The current situation is a precarious one. At a high level, Canadians are not as pessimistic about the economy as they were in 2009, but more are reporting cutbacks on spending. Concern about an upcoming recession is also quite high. If consumers drive the Canadian economy, and spending drops off due to economic anxiety, trouble could follow.

The current situation suggests opportunities for governments. When asked about their economic priorities in 2019, Canadians gave almost equal weight to reducing poverty and homelessness, creating jobs, and protecting the environment. Notable government action on any of these files could help to buoy consumer confidence and keep Canadians spending. While job creation and support for the most economically vulnerable might seem like obvious drivers of consumer confidence, some might wonder how environmental protection fits into this analysis. The answer is that, for the majority of Canadians, protecting the environment has the potential to improve economic growth and provide new jobs rather than constrain the economy.
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