THE RECESSION

DIMINISHED EXPECTATIONS

Pessimism reaches a seven-year high in Maclean’s polling

BRENDA DALGLISH January 7 1991
THE RECESSION

DIMINISHED EXPECTATIONS

Pessimism reaches a seven-year high in Maclean’s polling

BRENDA DALGLISH January 7 1991

DIMINISHED EXPECTATIONS

THE RECESSION

Pessimism reaches a seven-year high in Maclean’s polling

They are two working Canadians with opposing viewpoints on Canada’s economic prospects. Randall Tuck, a salesman working on commission for a trucking company in southeastern Ontario, says that he is losing faith. His own industry is in chaos, Tuck said, because the government deregulated it two years ago and Canadian truckers are finding it extremely difficult to survive against U.S. competition. “To be honest, I’d love to retrain and get out of this industry,” he said. “But I’m 38 and I have three children. How am I going to pay my mortgage?” Across the country in Redcliff, Alta.,

Bryan Pegg paused for a long moment when asked why he is optimistic about the future. Then, the 19-year-old apprentice welder, who works in nearby Medicine Hat, said: “I just am. The way the country is going, there are no big problems that I can see.” Pegg acknowledged that the current recession is hurting much of the country, but added, “We have them all the time, and we always come through.”

Like Pegg, the majority of people surveyed in the seventh annual Maclean’s/Dedma poll remain optimistic about their economic future. But this year, more respondents, including Tuck, expressed pessimism about their own economic future— and the country’s—than at any time since the year-end poll began in 1984 (questions 2 to 6 and 9 in poll text, page 32).

The changes from previous Maclean’s/Decima polls have been dramatic. The percentage of people who said that they are dissatisfied with their current economic situation has increased by five points, to 31 per cent, since the 1989 poll. And it has almost doubled from its lowest point, in 1988, when just 16 per cent said that they were dissatisfied. The number of respondents who say that they are pessimistic about their economic prospects also increased—to roughly one in four this year, from about one in five last year. At the same time, the poll revealed a tendency among Canadians to rely more on themselves, rather than tum-

ing to government or other institutions to look after their interests. But given the fact that the Canadian economy had been contracting for at least she months by the time the poll was conducted in November, some analysts said that those results were reassuring. Said Peter Cook, an economist and senior vice-president of Van City Savings Credit Union in Vancouver: “I’m only surprised that even more people aren’t dissatisfied this year.”

There is no doubting the grim conditions in the land. The country officially entered a recession when it recorded its second consecutive quarter of decline in the gross domestic product in the three months that ended on Sept. 30. Unemployment rose to 9.1 per cent of the workforce in November—the highest level since July, 1987—and the prime interest rate climbed to as high as 14.75 per cent during the summer before easing back slightly. Personal

and business bankruptcies soared while prices in the real estate market tumbled. But Finance Minister Michael Wilson continued to insist that the downturn will not be as bad as in the 1981-1982 recession, when the prime rate hit 22.75 per cent and unemployment soared to 11.8 per cent. During that period, the gross domestic product—the value of goods and services produced in the country-fell by 5.5 percentage points. “Now, all the analysts expect [a drop of] about one per cent,” Wilson said. “It’s very different.”

Still, economic issues dominated when respondents were asked about their current concerns. According to an overwhelming 90 per cent of those surveyed, the recession is not about to disappear in the immediate future. The only debate is over how bad it will be. While 54 per cent are expecting it to be mild, another 36 per cent say that it will be severe. Said Michael McCracken, president of the economic forecasting agency Informetrica in Ottawa: “When times get tough and people get scared, they turn to the pocketbook issues.” And times are tough. But such an extremely negative attitude, shared by more than one out of three respondents, worries some economists. Edward Neufeld, the Royal Bank of Canada’s executive vice-president of economic and corporate affairs, says that if a severe recession is defined as being comparable to the 1981-1982 recession, the worst economic slowdown since the Depression of the 1930s, then those polled are significantly more pessimistic than the professional forecasters. Said Neufeld: “If you look at the 20 or so major Canadian forecasts, you’ll find that none of them point towards a severe recession.” But the problem, he added, is that gloomy expectations could become a self-fulfilling prophecy, particularly when they spread through the business community. “That mood of pessimism,” he explained, “has the potential to change the degree of severity and the length of the recession.”

Continuing a trend that has been growing in recent years, people seem to be looking to new sources for solutions to their economic problems. Business is in, government is out. Fortyfive per cent of those polled said that they look to business to take care of their economic interests, down slightly from 50 per cent a year earlier, but still up considerably from the 32 per cent in 1984, the first year the question was asked. The number who relÿ on government is now down dramatically, to just 27 per cent from 49 per cent in 1984. And although just 16 per cent said that they rely on unions, that is the highest level since the inception of the poll. In 1984, 10 per cent of respondents cited unions.

Still, Allan Gregg, president of Decima Research Ltd., said that those findings do not necessarily mean that Canadians have fallen in love with business. Said Gregg: “The question is a little bit like ‘What’s your favorite food: broccoli, liver or sauerkraut?’ You have to give some answer, and if you hated one more over the last little while, then it’s going to get chosen less.”

In fact, across the country, a significantly large 12 per cent of the respondents declined to pick any of the three.

When asked next about the performance of the sector they chose as best able to look after their interests, respondents who named government were clearly the least satisfied. Almost half—46 per cent—said that government has done a poor job, with only 16 per cent saying that it had done well. On the other hand,

unions got a strong vote of confidence from the respondents who looked to them for help. Sixty-one per cent of that group said that the unions were doing a good job of looking after their interests. And respondents who looked to business were almost as content, with 54 per cent satisfied with the job business has done. Still, the poll suggests that Canadians are developing a greater sense of personal responsibility. Asked whether they feel more confident about looking after their own economic interests than they did a few years earlier, 56 per cent said yes, while just 23 per cent said that they feel less certain. Said Gregg: “Peopie are saying they can’t trust traditional leaders, so that all that is left is for them to look after their own interests.” The respondents who were most likely to feel more confident included residents of Quebec, people who live in large cities, those under the age of 30 and those with annual household incomes of over $60,000. As well, there was a tendency for those who feel most dissatisfied with their current and future economic prospects to report that they were also a lot less confident

about their ability to look after themselves.

That tendency towards self-reliance is not just a Canadian phenomenon. It is even more clearly evident in the Eastern Bloc countries that are rushing to rid themselves of state-controlled economies in favor of the free market. Neufeld said that the worldwide trend is driven by people’s realization that governments cannot even manage their own affairs competently, let alone deliver on all their promises. Declared the 63-year-old economist: “It is a fundamental sociological change from my younger days, for example, when we really did think that governments could solve problems.” The economic developments of the past year clearly did not encourage Canadians to resurrect that attitude from the past.

BRENDA DALGLISH