Economic Club Of Canada Survey Says Canadians Increasingly Worried About Economy
TORONTO - A growing number of Canadians are more worried about the future of the economy, and how they'll fare in the midst of what many consider a mild recession, according to a survey released by the Economic Club of Canada.
The poll, conducted in December, found that only 25 per cent of respondents say they feel optimistic about the economic prospects in the coming year.
That's down from 36 per cent a year earlier who say they were optimistic, and down even further from the 54 per cent who said they were optimistic in the 2009 survey.
The growing pessimism comes as most economists predict Canadian growth this year of less than two per cent, with minimal growth in jobs.
Such feeble growth won't do much to create jobs for the 1.5 million Canadians currently unemployed or lower the 7.4 per cent national jobless rate.
Statistics Canada releases the December unemployment report Friday.
About 70 per cent of the poll's respondents said they believe the country is already in a mild recession, though not yet in a technical recession.
A technical recession is two successive quarters of economic shrinkage.
In the third quarter, real gross domestic product grew at an annualized rate of 3.5 per cent after a second-quarter drop of 0.5. per cent. That was mostly driven by the energy industry, based in Western Canada.
"This is the most pessimism we've seen, except for briefly in 2008, since 1996," said Michael Marzolini, chairman of Pollara Strategic Insights, which conducted the survey on behalf of the Economic Club.
"Canadians not only believe we're now in a recession, but expectations for the length of the recession are actually longer than they were in any year since 2008."
A growing number of respondents were also concerned about how the weaker economy will impact their personal finances. About 47 per cent said they believe income will fall below the cost of living.
Poll results were collected online from 2,878 Canadians by Pollara research firm.
5 ECONOMIC LANDMINES THAT COULD IMPACT CANADA IN 2012
1. RISING HOUSEHOLD DEBT
Canada's household debt burden climbed to yet another record high in the third-quarter, prompting Bank of Canada Governor Mark Carney to call it <a href="http://www.montrealgazette.com/business/Mark+Carney+again+sounds+alarm+rising+Canadian+household+debt/5856418/story.html" target="_hplink">"the greatest risk to the domestic economy</a>." At 150.8, <a href="http://www.reuters.com/article/2011/12/14/us-economy-debt-idUSTRE7BC2DY20111214" target="_hplink">Canada's debt-to-income ratio is now higher than in the U.S. or the U.K</a>. Meanwhile, household net worth fell, which, as many observers have warned, has made Canadians more vulnerable to adverse economic shocks.
2. SLUGGISH CONSUMER DEMAND
Though BMO's Doug Porter maintains that low interest rates and modest job growth should prevent household debt issue from becoming "a clear and present danger to the outlook in the year ahead," he predicts that the debt burden is likely to increase. Unlike in the U.S., Canada's consumer recession was "very mild," leaving scant room for growth in consumer spending, he says. "At best, we see consumer spending growing in line with income next year," he said. "We've actually pegged it a little bit below income growth next year ... at less than two per cent in 2012." (FREDERIC J. BROWN/AFP/Getty Images)
3. EUROZONE INSTABILITY
When TD cut its 2012 outlook for the Canadian economy earlier this week to 1.7 per cent, the bank cited a deepening fiscal crisis in the eurozone as one of the primary factors. More bearish than BMO, which on Thursday held its expectation for Canada's GDP growth next year at two per cent, TD is forecasting "a deterioration of financial conditions and a significant European recession in the first half of next year." "<a href="http://www.td.com/document/PDF/economics/qef/qefdec11_can.pdf" target="_hplink">A deepening recession in the region will exert a significant drag on the global economy</a>," the bank maintained. "Canada will be negatively impacted through weaker commodity prices, confidence and export growth. Labour markets will also soften as a result." (ERIC FEFERBERG/AFP/Getty Images)
4. CHINA LOSING STEAM
The signs are abundant that the world's largest economy is cooling. Mounting local government debt and slowdowns in everything from industrial production to <a href="http://www.cbc.ca/news/business/story/2011/12/09/china-economy-slows.html" target="_hplink">the housing market has led many to predict softer economic growth in 2012</a>. "<a href="http://www.npr.org/2011/12/13/143623874/after-boom-chinas-property-market-heads-lower" target="_hplink">Real estate is a locomotive industry that leads at least 58 other industries</a>," Cai Weimin, who runs a real estate think tank in Shanghai, told NPR. "Doomsday probably won't come true in 2012, but for the Chinese economy, 2012 will be a very tough year. (Aaron tam/AFP/Getty Images)
5. GROWING INCOME GAP
As Canada's rich-poor divide widens, some experts warn that the concentration of wealth at the top of the income distribution and stagnating wages for everyone else could be a drag on the economy. Though Canada's income gap is not as pronounced as in the U.S., Canadian Centre for Policy Alternatives economist Armine Yalnizyan argues that the growing divide is bad for business all the same. <a href="http://www.huffingtonpost.ca/news/mind-the-gap" target="_hplink"><strong>Mind The Gap: Our examination of Canada's growing income divide</strong></a> "<a href="http://www.canadianbusiness.com/article/39123--inequality-is-bad-for-business" target="_hplink">Real growth in purchasing power has been restricted to a small fraction of Canadian consumers</a> in what is already a small market," she maintained in an op-ed in Canadian Business magazine. "Throttling aggregate demand slows the economy for everyone." Anne Golden, president and CEO of the Conference Board of Canada, echoes this sentiment. "Growing inequality distorts consumer patterns," she told The Huffington Post in a recent interview. "Most businesses, except maybe for Porsche [dealerships], rely on rising purchasing power of the many, not the few, to deliver growth and profits." (ADRIAN DENNIS/AFP/Getty Images)