The Economy


PATRICIA BEST January 4 1988
The Economy


PATRICIA BEST January 4 1988


The Economy

It on seemed the party as if on the Oct. roof 19 had when caved the in world’s stock markets collapsed with a shudder. But for Canadians, the headlines after Black Monday appeared to represent a distant phenomenon that left their own economic situation almost untouched. Most respondents in The Maclean's/Decima Poll—even those with money in the stock market—said either that the crash would have only a minor effect on their household (43 per cent) or no effect at all (42 per cent). One of those people was poll respondent Shelley Johnson of Burlington, Ont., 56 km west of Toronto, who had invested in a small stock portfolio. Said the 26-yearold environmental and industrial technologist: “The crash has affected us in that the value of our portfolio has dropped. But it hasn’t had any major impact on our lives.”

Canadian economists Carl Beigie and William Mackness say that they are not surprised by that calm assessment. Said Beigie, chief economist with Toronto-based Dominion Securities Inc.: “People just feel too good to be tearing their hair out.” Added Mackness, vice-president and chief economist for the Bank of Nova Scotia of Toronto: “The winnings have been so great in the past few years that most people look at it as losing paper profits rather than a serious hit.” Although individuals are clinging to the belief that their own world will stay intact, they are not so sure about the outlook for everybody else. When asked whether the stock market crash might signal a general economic downturn in Canada, 52 per cent of those polled said that it was more likely than it had been before Black Monday. In Quebec, where average wage-earners had been encouraged to invest in the stock market through the Quebec Stock Savings Plan—which was severely jolted by the October crash— only 43 per cent predicted major economic problems for Canada. But compared with fewer than three out of 20 respondents across Canada who foresaw a major impact on themselves or their households, five out of 20 in Que-

bec expressed that view.

Said Philippe Bernard,

55, a dairy and cattle farmer in St-Victor,

Que., 75 km south of Quebec City: “The stock market has already affected us; beef dropped 15 cents a pound.”

Still, after several years of an improving economy, the vast majority of Canadians are reluctant to let go of their hopes for a steady climb into greater prosperity. Almost four out of five expressed satisfaction with their current economic situations and a greater proportion (85 per cent) said that they are optimistic about their future prospects. Ontario, the most prosperous province, registered the highest degree of happiness, with 84 per cent reporting personal satisfaction. One of them was respondent Julie Stone, who sells lighting to architects and construction firms in Toronto.

Two years ago, as a single mother, Stone, 32, worked six days a week to support herself and her five-year-old daughter, Natasha. Now, she is living with Natasha’s father, David Brine, a construction contractor, and her economic situation has improved. Said Stone: “Like anyone else, I would love to be filthy rich and not have to work. But I am happy with my own income.”

my own

As for 1988, she said, “as far as my family is concerned, I am optimistic.” For Eric Pitkin, a self-employed cabinetmaker in the small Ontario town of Fenwick (population 1,800), about 12

km west of Niagara Falls, the economy was almost too healthy. To keep up with demand, Pitkin, 38, had to work seven-day weeks and 16-hour days doing renovation work in houses. Howev-

er, Pitkin, who lives with his wife, Connie—she works full time as a dispatcher for a trucking company—and their two daughters, Amy, 7, and Kelly, 6, was not complaining. Said poll respondent Pitkin of the boom: “I don’t think it will ever end. I am busier than a one-armed paperhanger.”

Regionally, the highest degree of optimism about personal economic prospects was recorded in Alberta. Although the province has been battered by a slump in oil prices and a depressed local economy, almost 91 per cent of those polled in Alberta expressed optimism. Economic forecasters agree. The Conference Board ' of Canada, for one, says, “Alberta’s economy is making a significant recovery.” By contrast, the two most pessimistic areas in the country were Prince Edward Island and Saskatchewan, where one in five of those surveyed were gloomy about the future.

The country’s generally buoyant mood is a product of strong economic growth in 1987. The Conference Board, an Ottawa-based economic think-tank, said that real domestic product—one important measurement of economic growth—increased by 3.8 per cent nationally. Ontario’s growth rate during the year was 5.3 per cent, and Quebec’s domestic production grew by five per cent. The inflation rate was 4.6 per cent in the third quarter, and the unemployment rate continued to drop—

to 8.2 per cent of the workforce in November from almost 12 per cent in 1983. Declared the Bank of Nova Scotia’s Mackness: “The Canadian economy is in a full-blown boom. It is as strong an economic performance as we have seen since Confederation.”

With that well-being has come the freedom to pay more attention to issues unrelated to hard times. In the previous three years, as Canada moved out of the 1982 recession, the majority of poll respondents named unemployment as the No. 1 issue facing the

country. But in 1987, as negotiations between Canada and the United States resulted in a draft free trade agreement on Oct. 3—agreement on the detailed terms of the proposed accord came on Dec. 7, after The Maclean's/ Decima Poll—respondents began to focus on the issue. The single largest group of respondents—26 per cent— identified free trade as the top issue facing the country. By contrast, in 1985 only two per cent named free trade, and in 1986, five per cent.

Dominion Securities’ Beigie, who has been a strong advocate of freer trade with the United States for many years, said: “This is important, for crying out loud. Anybody with a full life left to live in the job area has to be concerned.” The poll revealed that respondents in the 18-to-24 age group—where unemployment is highest—were more likely than any other working-age category to name free trade as the top issue (30 per cent, compared with 26 per cent overall). “Obviously the younger you are, the more you will be asked to make certain adjustments down the road,” said Beigie.

Still, unemployment continued to generate substantial concern, with 20 per cent naming it the top issue. Unemployment was more likely to rate in Quebec, where 31 per cent mentioned it, and in Atlantic Canada, where 24 per cent cited it as the top issue facing Canada. For poll respondent Huxley Warren, 47, of Gagetown, N.B., the issue is all too real. Warren is an electrician, but he is often unemployed and has learned to cope with the long periods without work. “I can handle it,” he says. “You budget yourself to live with unemployment.” But 1987 has been a hard year in which to find work in the Atlantic region, and Warren has contemplated looking for work in Ontario. That angers him. Says Warren: “I have lived here all my life, and I don’t think it is right that a man should have to leave his own province to get work.”

Meanwhile, in Winnipeg, poll respondent Shane Kuros, 20, a commerce student at the University of Manitoba, is a strong believer in the durability of the country’s economic boom. Kuros, who originally had ambitions of becoming a teacher, says he was steered into business by his father, who works as a banker. Now, says Kuros, “I am a capitalist, and money means a lot to me. I am not sure it buys you happiness, but it sure makes it easier.” For Kuros and most other poll respondents, Black Monday failed to take the shine off their optimism and the promise they see in the future.