Canadians Give Trudeau Little Credit for Boom Amid Deficit Fears
(Bloomberg) -- Canada’s economy may be one of the strongest in the developed world this year, but Prime Minister Justin Trudeau’s government isn’t getting much credit.
A Nanos Research poll conducted for Bloomberg News found just 25 percent of Canadians describe Trudeau’s performance as an economic manager as good or better -- fewer than other surveys suggest would currently vote for the Liberal Party leader. Some 36 percent rate his performance as poor or very poor, and another 36 percent mark it as average.
It’s a disappointing result for Trudeau given the country is on pace to lead the Group of Seven in growth with its strongest expansion since 2011. Canadians instead seem focused on rising interest rates and the deficit, which is a modest 0.9 percent of gross domestic product.
“What this survey shows is that there is fundamental disconnect between the macroeconomic reality and micro opinion of Canadians,” pollster Nik Nanos said in an interview. “For all intents and purposes, there’s quite a small minority of Canadians not concerned about housing and interest rates. It’s a large, dark cloud that looms over the psychology of Canadians.”
The results could reflect a deeper malaise for which Trudeau’s government may find no easy solutions: anxiety over housing affordability and growing piles of debt at a time when borrowing costs are rising. Concern over debt loads could turn any interest rate increases by the Bank of Canada into a political headache for the Liberals.
Other highlights of the survey include:
- 40 percent of respondents say reducing the deficit should be Trudeau’s top priority with a windfall generated by strong growth. Another 21 percent call for spending on social programs, 19 percent prioritize infrastructure spending, 18 percent want tax cuts for individuals and 1 percent want tax cuts for business
- 88 percent of Canadians are at least somewhat concerned about the price of housing
- 84 percent are at least somewhat concerned about the gap between Canada’s rich and poor, a key Trudeau economic theme
- 81 percent are at least somewhat concerned on the ability of Canadians to pay their mortgages and debts as interest rates rise
Trudeau’s team swept to power in 2015 with lofty pledges on issues such as middle-class anxiety, the environment and progress for indigenous Canadians. The poll results raise a question of whether the Liberals have set expectations too high, Nanos said.
“The Liberals were quite clever before they were in government in managing expectations” but have since created high expectations, the pollster said. “If they are not able to make headway after creating all those high expectations, that’s when they are going to run into political turbulence. The Liberals are saying all the right things but Canadians want them to do stuff.”
This year is shaping up to be the strongest for new housing starts in a decade. Excluding inflation, Canada’s economy grew by 4.2 percent in the second quarter from a year earlier, a pace not seen since 2000. Employers added 312,700 jobs over that time.
Even with an anticipated second-half slowdown, Canada is headed for 3 percent growth for all of 2017. That would end a five-year stretch of sub-3 percent readings that’s already tied as the longest on record in data back to 1926.
A synchronized global recovery and rising global trade volumes are backstopping the growth, along with the bottoming out of the oil shock in western Canada and soaring home prices in Toronto and Vancouver. But there are some aspects of growth the government can take credit for. Federal deficit spending, particularly the enhanced child benefit system, has supercharged consumption -- and, as such, Bank of Canada Governor Stephen Poloz has said the child benefit is helping spur the hot economy.
Region by Region
The parts of Canada that have been hit hardest by the oil-price collapse -- the prairies and Atlantic Canada -- are the most likely to rank Trudeau as a poor economic manager. The prime minister is doing better in the regions that have prospered since he took power. The only part of the country where a plurality think the Liberals are doing a good job is Quebec, which holds the second-highest number of electoral districts in Canada.
Ironically, it was Trudeau who won the economic argument in Canada’s last federal election. Other polling by Nanos Research for Bloomberg ahead of the 2015 election showed 39 percent of Canadians ranked Trudeau as the leader with the best economic platform -- he was the only one that pledged deficits -- compared with 33 percent for former Prime Minister Stephen Harper’s Conservatives and 16 percent for the New Democratic Party under Tom Mulcair.
With Harper and Trudeau neck-and-neck in voting intentions, that Nanos survey showed how the Liberal leader had managed to erode the incumbent Conservative’s long-held advantage on economic matters with a pledge to raise taxes on high-income earners and run deficits. And the difference reflected a large lead for Trudeau among women -- 43 percent to 27 percent.
This month’s Nanos poll shows the gender divide remains. Women are more likely than men to rate Trudeau’s economic performance as very good, good or average. Women are also substantially more likely to be worried about rising interest rates -- 85.6 percent are at least somewhat concerned, compared to 76.8 percent of men.
In addition, women are more likely to be concerned about the affordability of housing, and the gap between rich and poor. Reducing the deficit is still the top priority for women, though by a smaller margin than for men -- 33.5 percent of women want a smaller deficit, while 24.9 percent want more social spending, compared to 46.4 percent and 16.4 percent for men, respectively.
The Nanos survey was compiled with responses from 1,000 Canadians polled between Nov. 4 and Nov. 7, and is considered accurate within 3.1 percentage points, 19 times out of 20.
Performance as economic managersVery Good
Impact of higher interest ratesConcerned
Gap between rich and poorConcerned
Priorities for budget windfallReducing the deficit
Investing in social programs
Investing in infrastructure
Reducing personal income taxes
Reducing business taxes
©2017 Bloomberg L.P.