Economic Outlook 2021: Canadians sour on the economy, but more positive about personal finances

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January 12, 2021 — The results are in for the 26th annual edition of Pollara Strategic Insights’ Economic Outlook study – Canada’s longest-running study of the public’s perceptions and expectations of the economy and their personal financial situation. It reveals a dramatic decline in Canadians’ views and expectations regarding the economy, but largely positive and somewhat improved sentiment about their own personal financial situation.   The positive outlook of 2018 was short-lived, as Canadians began 2019 once again feeling they were in a recession. Although 2020 began with a somewhat improved – but still negative – perception of the economy, the COVID-19 pandemic struck shortly thereafter. Thus, unsurprisingly, the public’s perception of the economy has now turned severely negative, with 81% (+34) feeling that the economy is in recession. Just 9% (-28) feel we are in a period of growth, although Q3 2020 saw our real GDP grow by 8.9%, following declines in Q2 (11.3%) and Q1 (1.9%).

  • Notably, there is an increase in the intensity of this perception, with 32% (+26) perceiving a severe recession and close to half (49%; +8) feeling a mild recession.
  • Those who believe Canada is in a recession are expecting it to last for a longer duration than in previous years, with a  majority expecting it to last either 1 to 2 years (48%) or longer (20%).
  • Most Canadians hold a negative outlook for 2021, expecting the Canadian economy and employment levels to worsen or remain stagnant. However, compared to previous years, more Canadians are expecting an improvement both factors.

Although Canadians have negative perceptions of the economy, sentiment about their personal financial situation is largely positive and somewhat improved compared to January 2020. Although this finding may appear counter-intuitive, it aligns with the findings of the sixth wave of our recent study on class identity and financial stability, wherein we found that many Canadians were reporting higher savings rates and greater financial stability – likely due to pandemic-related reductions in consumer spending and unprecedented income support from the federal government.

  • More than three-quarters are holding their own (54%; +1) or getting ahead (20%; +8) – an increase of 9 points, overall, since January 2020. And, fewer report that they are losing ground (22%; -10).
  • Also, fewer Canadians report that their household income is falling behind the cost of living (39%; -6). The remainder are outpacing (10%; +2), or keeping pace (43%; +2) with, the cost of living. 
  • Fears of job loss in the household have increased once again (35%; +10), to the largest level recorded in the past 26 years of this tracking study – just slightly above the previous high of 34% in 2014. However, just 8% say such job loss is very likely.

On a related economic matter, our study also found that approval ratings for the new CUSMA free trade agreement (AKA NAFTA 2.0 or USMCA) remain steady since 2019. Half (51%; +1) approve, while 19% (-2) disapprove and 30% are unsure – a level of uncertainty typically recorded for questions concerning free trade agreements as well as low-profile foreign affairs issues. Importantly, amongst Canadians with an opinion on this matter, almost three quarters (73%) approve, with just 23% expressing disapproval.

See the full details in our report and commentary in the Toronto Star article.

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