Canadians are more pessimistic about the economy than they have been since late 2009, and are cutting back their spending as a result, a new survey suggests.
A poll conducted by Toronto advertising agency Bensimon Byrne shows that 55 per cent of those who responded think the economy is in decline. That's the first time negative sentiment has outweighed positive views in the agency's quarterly survey since November, 2009.
While a large majority of Canadians were understandably discouraged about the state of the economy during the recession, those with optimistic views have outnumbered the pessimists for the past five years.
Essentially "Canadians are feeling tapped out," said Bensimon Byrne president Jack Bensimon. Several years of a limping economy has taken its toll, he added, as people deal with stagnating wages, higher costs of necessities, and high debt levels.
Ninety per cent of those surveyed said the cost of living is increasing faster than their incomes.
The sudden drop in oil prices, and the resultant fall in the Canadian dollar, has also put people on edge, Mr. Bensimon said. Even though many people will benefit from lower gasoline prices, they have been taken aback by the quick change in some key numbers. "A shock is a shock, and it reminds people of how precarious everything is," he said. "People feel anxious about the future because unexpected things are happening."
As a result of their pessimistic views, Canadians at all income levels are planning to reduce their spending, the poll suggests. That's a move that could potentially dent the economy further.
Those surveyed plan to spend less than they did last year on almost all "discretionary" items, such as restaurant meals, liquor, cosmetics and vacations. They do, however, plan to spend more on essentials such as groceries, electricity, Internet fees and car maintenance.
"The increasing cost of essentials is crowding out discretionary spending on non-essentials," Mr. Bensimon said. That could have a significant impact on the marketers who are his clients, and for many companies that count on consumer spending.
The worries about the economy could also have a significant impact on the federal election campaign later this year, Mr. Bensimon said, especially as all three major parties are courting the middle class. Significantly, his firm's polling shows that health care has fallen behind economic issues – including the cost of living, retirement saving and income inequality – as key issues that people are concerned with. "Two-thirds of Canadians think that Canada needs a different perspective on economic development," he said.