You've read all the bad news. Now where's the light at the end of the tunnel?
It was no surprise to us that this quarter's C-Suite survey paints the bleakest picture in three years of surveys about our economy, and the highest level of pessimism yet from executives of Canada's top 1,000 companies.
Over the past six quarters executives expressed deep concerns in our survey about the U.S. economy and more recently started to cast doubt on the Canadian economy. But this is the first quarter where a significant number predicted negative growth for their firms.
Yet it's in spite of this worsening situation that a majority are predicting a turnaround in the near to medium term. Even though more executives say it's more difficult to get access to credit this quarter compared with last, more executives this quarter are willing to say these concerns are going to improve in the short term. This is not to say there's consensus on these issues: Forty-four per cent of executives say it will take longer than a year for the economy to turn around and grow. It is telling, though, that despite what some call the worst crisis of its kind since the 1930s, half of executives predict a turnaround soon and expect that consumer spending will improve over the next 12 months.Part of this optimism may draw on what executives are seeing from governments around the world. While companies are cutting back, executives are supportive of policies they believe will help Canada stave off recession, including a stimulative deficit.
Nearly half of Canadian executives - and well more than that in Ontario - believe Finance Minister Jim Flaherty's economic statement was inadequate to deal with the economic crisis and should have included immediate fiscal stimulus to spur the economy. That is not to say they expressed a desire for a Liberal-NDP coalition to provide a better economic plan - quite the opposite. But business leaders are going to be looking to the Conservatives' January budget for more.
These attitudes likely take their cue from what we're seeing out of the U.S. and the U.K. treasuries, where Troubled Asset Relief Program (TARP) money and equity stakes in the major British banks were put into place with relative speed and won broad support from economists. These efforts, combined with steps taken by Mr. Flaherty to have the federal government buy up billions of dollars worth of Canadian mortgages and co-ordinate efforts with the G8 and G20, have counterbalanced the bad news with some sense of hope.
Those efforts may explain why just over half of executives expect the economy to turn around and experience growth in the next six months to a year, if not sooner, while a majority are still predicting moderate growth for their companies over the next 12 months.
But the support for stimulus initiatives and other aggressive policies to alleviate credit concerns - even those that add to the national debt - signal some hope that measures exist that can right the ship.
That is the message from this survey. Business leaders are pinning their hopes on governments - here in Canada and around the world - to pull us out of what everybody now concedes is a serious recession.
David Herle is principal and Alex Swann is vice-president at The Gandalf Group.
