THE ECONOMY

Optimism and realism

PATRICIA BEST January 6 1986
THE ECONOMY

Optimism and realism

PATRICIA BEST January 6 1986

The country’s economic health is a topic of concern to every Canadian. Taking the economic pulse of the nation occurs daily in taxi cabs, beauty salons and bars. Canadians may not have cared before the 1982 recession about the value of the dollar and unemployment rates, but now many track the nuances of the recovery with the practiced eye of a statistician. After all, the economic well-being of the country is a mirror of their own financial state. And according to the results of The Maclean's/Decima Poll, Canadians are feeling good these days, despite continued concerns about the country’s high unemployment rate. Said respondent Douglas Taylor, a 27-year-old former university student in business and economics who works as a part-time contractor in Vancouver: “People are a lot more optimistic now.”

And with ample reason: Canada’s economy performed well beyond the expectations of many of the experts during 1985. Economists predicted at the start of the year that real growth—as measured by gross national product—would average three per cent. In fact, the growth rate climbed during the year to more than four per cent—and may even reach 4.5 per cent when government figures for the year are released later in March. That impressive performance was accomplished without an outbreak of serious inflation. The cost of living rose by an average of four per cent in 1985 and is expected to remain stable or decline slightly in 1986. And interest rates remained relatively low, hovering around the 10-per-cent mark.

Optimistic: Indeed, many respondents in the second annual Maclean's/Decima Poll were clearly buoyed by the economic recovery they saw around them. For one thing, 73 per cent of those surveyed said they were “very satisfied” or “satisfied” with their “own personal economic situation”—barely changed from last year’s 76-per-cent satisfaction. And 80 per cent of respondents said they were “very optimistic” or “optimistic” about their personal economic prospects—the same as in 1984. Said Anderson: “People were anticipating better times coming out of the recession. Now many sense those times are upon us and they continue to expect more of the same.” As well, two-thirds of those polled said that they believed the economy was either in a “long-term” or a “short-term” recovery.

At the same time, there is an undercurrent of uncertainty beneath the basic optimism. Respondents continued to be concerned about the high level of unemployment—10.2 per cent in November. And there were clear indications that Canadians might be giving up on the notion that “sacrifices in terms of wage demands and government services” were needed “for the economy to get better in the future.” As well, fewer of them were relying on government to look after their “best economic interest.” The most satisfied with their financial situation were high-income earners (80 per cent compared to the national average of 73 per cent), people over 65 (89 per cent) and the university-educated (79 per cent). Those most likely to say they were dissatisfied included low-income earners (40 per cent compared to the average, 27 per cent) and the unemployed (53 per cent).

Similarly, the respondents more likely to say they were optimistic about the future included high-income earners (86 per cent compared to the poll average of 80 per cent), those 20 to 30 years old (86 per cent) and yuppies (87 per cent). Those more likely to be pessimistic were rural dwellers (25 per cent versus the average of 19 per cent), the unemployed (31 per cent) and those with an elementary school education (28 per cent).

Quebec respondents posed an interesting contrast: more people tended to see a dim economic future for themselves personally (24 per cent compared to the poll average of 19 per cent); but they were also more likely to say the Canadian economy was in a period of recovery. Certainly, optimism about personal financial wellbeing sometimes had little to do with a respondent’s actual situation. Adrian Vanderwoerd, a 58-year-old London, Ont., resident with five children, said that he had a household income of $25,000 a year. With plans to pay off his home mortgage next year, Vanderwoerd said a major problem in Canada was that people are greedy—“They want two cars, a boat and a cottage.”

Unemployment: For Maclean’s/Decima Poll respondents, the chronic problem of the 1.3 million unemployed Canadians continues to be a worry—although there has been a drop in concern from last year’s poll results. In 1985, 45 per cent of those surveyed cited unemployment as “the most important issue facing Canada today”—a drop of seven per cent from 1984 when the same question was asked. Said one cynical respondent: “We are complacent about unemployment, and I don’t think the unemployment figure is a true figure.” Those more likely to name unemployment as the most important issue facing the country were the unemployed themselves (60 per cent compared to the poll average of 45 per cent), respondents from British Columbia (61 per cent), Quebec (56 per cent) and the Atlantic region (52 per cent). One concerned respondent was Laura Mable, a 49-year-old public school supply teacher in Beamsville, Ont. “Going into the schools, I have seen too much of families ripped apart by fathers not working,” said Mable. “Our family has trouble, but we have it 100 per cent better than the children I teach.”

Along with the pain of unemployment, the poll revealed an underlying sense that the critical, deep-rooted economic problems facing the country were not going away. That was particularly evident in areas such as the Atlantic region which have been slow to feel the recovery (page 32). While 38 per cent of respondents said that the economy was in a period of long-term recovery, 27 per cent thought that recovery would be short-lived while a substantial 34 per cent said the economy was “not recovering at all.” Said Vanderwoerd, who runs a picture-framing business from his home: “The tobacco belt near here is hurting. If you go into town, instead of being busy for Christmas, there is very little business.”

Sacrifice: Despite the prevailing optimism about personal finances detected in the poll, four in 10 respondents said that making sacrifices in terms of wage demands and government services “does not help much either way, and we should all just concentrate on making our own situation better.” Another eight per cent said “things seem to be going so well that these kinds of sacrifices are not really needed.” A bare majority—53 per cent—agreed that “for the economy to get better, the average Canadian is going to have to make sacrifices.” One of those who had given up on the postrecession idea that belt-tightening would bring back the boom times of the early 1970s was respondent Annie Douglas, a 37-year-old self-employed beautician in Mount Pearl, Nfld. “Why should it always be the little person that has to tighten his belt?” she asked.

Respondents who were more convinced that sacrifices were still needed included those 65 years or older (63 per cent compared to the poll average of 53 per cent), Prairie residents (59 per cent) and yuppies (62 per cent). Forty-eight per cent of unemployed respondents said that sacrifices just did not help to make the economy better (compared to 38 per cent nationally).

Still, Maclean’s/Decima Poll results suggest Canadians are beginning to accept the notion that the government cannot be counted on as the ultimate provider of needs. In the 1984 poll 49 per cent of respondents said they relied on government to look after their “best economic interests.” But in the 1985 poll only 42 per cent held that view. The number of those who looked to business remained the same (33 per cent in 1985 versus 32 per cent in 1984), while the number of those looking to unions went to 14 per cent from 10 per cent in 1984.

Those more likely to say they looked to government were people over 55 years of age (54 per cent compared to the poll average of 42 per cent) and those with elementary school education (56 per cent). Poll respondents who said they rely on unions to look after them were more likely to be under 25 years old (23 per cent compared to the average of 14 per cent).

Respondents more likely to rely on business were Canadians earning more than $40,000 a year (46 per cent compared to the average of 33 per cent), yuppies (45 per cent) and British Columbians (42 per cent). Said Regina resident Glen Salie, a 46-year-old construction company manager with an annual income of more than $40,000: “I am not one who likes to freeload off the rest of society. I will take a gamble before I would ever ask for money.”

That attitude is very much part of the prescription for a sustained recovery, according to politicians, business people and some economists. For the business community the $35.8-billion federal deficit stands as the primary economic problem. But the public still appears to put a low priority on eliminating the deficit. Last year less than one per cent cited it as “the most important issue facing Canada today.” This year, despite the government’s attempts to raise public awareness, only four per cent of the poll’s respondents cited it.

For Walter Nickerson, a 30-year-old refrigeration mechanic in Penticton, B.C., the Conservatives’ desire to let business spending—rather than Ottawa’s—lead the way to a stronger economy has yet to be turned into a workable policy. He said he is particularly disappointed in the government’s efforts to encourage entrepreneurship.

Nickerson considered starting his own business but he says he quickly became discouraged by the lack of tax incentives. Said Nickerson: “The way I see it, there is a secretary and another refrigeration mechanic out of work because I can’t start my own business.”

That frustration over the mixed signals coming from Ottawa about the economy often dominates the conversation when Nickerson and his friends get together. Undoubtedly, Canadians will continue to take the pulse of the economy, hoping that the general mood of optimism will be translated into better times.