Economic sky has fallen, gloomy Manitoba majority says in survey Nearly seven of 10 in poll believe Canada in a recession; pessimism growing, but ‘we’re not there yet,’ U of M professor says
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A majority of Manitobans believe the country is in a recession, but a local economist says that’s not the case.
At least not yet.
A poll conducted by Leger found 23 per cent of Manitobans believe the country is definitely in a recession; another 45 per cent said it is probably in recession.
Only 14 per cent said Canada is not in a recession, and the remainder said they’re not sure.
And, of the Manitobans who believe the economy is in a recession, 42 per cent don’t believe it will end until after this year; 28 per cent think it will be over sometime this year.
But Fletcher Baragar, an associate economics professor at the University of Manitoba, said that while people in the province are becoming increasingly pessimistic, “We’re not there, or we’re not there yet.”
Baragar said the latest prediction from the province is real growth of 0.7 per cent in 2023.
“That’s almost a stagnant economy,” he said Wednesday. “And StatsCan thinks the first two quarters of this year could be slow growth and then positive growth later.
“But, maybe now to June, with almost zero growth, if we go slightly negative it would be a recession.”
Andrew Enns, executive vice-president of Leger’s Central Canada operations, said that while Manitobans and Canadians had more optimism about the economy in 2021 and early 2022 after COVID-19 vaccines became available, they are gloomy about the country’s prospects now. Sixty-five per cent of Manitobans, and 62 per cent of Canadians think the economy is in poor condition.
“People believed 2022 was going to be a good year; we were going to get free of the pandemic. You could see the light at the end of the tunnel. What we didn’t realize was the light was a freight train with higher interest rates and inflation.”–Andrew Enns
“It felt like we were really getting to the end (of the pandemic),” Enns said. “There was much more optimism. People believed 2022 was going to be a good year; we were going to get free of the pandemic. You could see the light at the end of the tunnel.
“What we didn’t realize was the light was a freight train with higher interest rates and inflation.”
The cost of groceries — a head of lettuce going for $7 — and gasoline skyrocketed.
And, at the same time, the Bank of Canada has repeatedly hiked its benchmark interest in an effort to tame inflation. Last week it raised the number to to 4.5 per cent, increasing the cost of consumer borrowing.
On Wednesday, the average five-year fixed mortgage rate — which was 2.19 per cent in October 2021 — was 5.03 per cent. The three-year was 5.38 per cent, and the five-year variable rate was 4.13 per cent.
“There is uncertainty,” Enns said. “Nobody is really sure what will happen. And, if you’re the consumer, uncertainty is not a great thing.”
But when it comes to their own personal finances, he said six in 10 Manitobans and Canadians feel “good” or “very good.”
“Yes, there is a population sitting on larger mortgages and who are a bit apprehensive, but it’s not like other parts of our country,” he said. “Our housing market is one of the few healthy and balanced, compared to other parts of the country.”
Kate Kehler, executive director of the Social Planning Council of Winnipeg, said she wonders how much annual income the six out of 10 who feel good about their personal finances earn, but she can understand why they would say that.
“It is something within people’s control and they feel they can control that,” she said. “They can’t control the national or provincial economy, but they can control their personal finances. But it would be good to know what the income level is because Manitoba is the highest rate of child-poverty.
“I’m not sure where this confidence comes from.”
Kehler said the province’s decision to send $225 cheques to people who are single and $375 to couples whose family net income was less than $175,000 on Dec. 31, 2021, could have been better targeted.
More money should have gone to residents who earn between $30,000 and $50,000, she said.
“The $225 will make life easier only for a tiny period of time. It’s only a one-time payment and it doesn’t make for systemic changes for people.”
Meaghan Erbus, Harvest Manitoba’s director of network, advocacy and education, said the food bank is helping more people who’ve been affected by economic conditions.
“We are seeing unprecedented demand,” Erbus said. “People are out of money. As prices go up, it hurts more people.”
About 25 per cent of the people Harvest helps have jobs and, of those, 40 per cent are working full time, she said.
“That is quite different than who we saw in the past,” she said.
Stephanie Milos, a Harvest Manitoba spokeswoman, said the people being hit hard right now are in the lower middle class.
“We’re seeing an influx of clients who were previously teetering on the edge of whether or not to visit a food bank and are living paycheque to paycheque,” Milos said, noting Harvest helps 90,000 Manitobans every month, twice as many as in 2019, with 73 per cent of people earning less than $20,000 annually.
“Because of inflation and record-high food costs, their income simply isn’t enough to make ends meet anymore and they now have to choose between paying the bills or putting food on the table.”
“Because of inflation and record-high food costs, their income simply isn’t enough to make ends meet anymore and they now have to choose between paying the bills or putting food on the table.”–Stephanie Milos
Baragar said if the economy goes into recession it could look different than in the past, when companies shed employees and reduced manufacturing items to lower costs.
“In the last year-and-a-half, companies have faced labour shortages and a lot of trouble finding people. I would anticipate, for many firms, they would now be more reluctant to lay off people,” he said.
“To some extent, workers are gold right now.”
Manitoba is coming off a year where farmers had a good year, Manitoba Hydro was able to export plenty of energy, thanks to high water levels on Lake Winnipeg and the aerospace industry is bouncing back after some bad years due to the pandemic, he said.
And the provincial government, which is facing an election in the fall, has been announcing millions of dollars of increased spending in different areas, which also helps, he said.
The online survey of 2,385 Canadians 18 years of age and older — 400 of them Manitobans — was conducted Jan. 6-10.
The margin of error for the Manitoba portion of the poll is plus or minus 4.9 per cent, 19 times out of 20, while the national sample is plus or minus two per cent.
Kevin Rollason is one of the more versatile reporters at the Winnipeg Free Press. Whether it is covering city hall, the law courts, or general reporting, Rollason can be counted on to not only answer the 5 Ws — Who, What, When, Where and Why — but to do it in an interesting and accessible way for readers.