Tag Archives: Quebec economy

We’re More Confident – But Why?

Yesterday, the Bloomberg Nanos Consumer Confidence survey came out and great news, apparently: We’re getting more optimistic about the economy.

So, these 1,000 respondents studied a lot of economic data first? No chance. I always wonder what the respondents base that on. My best guess is that we just respond based on our personal economy. We base it only on what’s happening in our lives. Then, the economists take the responses and work backwards in guessing why we’re more or less confident.

The government loves a higher consumer confidence level. You and me are responsible for around 70% of economic activity with our spending. If we stop, the economy crashes. If we’re confident and keep spending – it’s all good for governments and business. Not so good for our debt…

The analysts say it’s because oil is over $60 and people in the West are more confident as a result. Really? I bet very few respondents would know that. I’d bet it’s more about hanging onto their job, reading about fewer layoffs, or seeing their neighbour or kids getting at least some kind of position.

A 5.9% unemployment rate is certainly great news for anyone looking for a job in Eastern Canada. But the national unemployment rate wouldn’t make me more positive – it’d just be what’s happening in my life.

The most optimistic people are in Quebec. The survey people think it’s partly because of foreign buyers now going into Montreal. Well, that happened so recently, there’s little chance it’s in the survey results. All time low unemployment certainly helps get people a raise. So you now make $200 more a month. That’s normally enough to make someone optimistic. But our brain blocks out the fact that we need a new roof, our line of credit hasn’t shrunk in a decade, and every day the car starts is a miracle.

That’s a province with massive infrastructure problems, debt, and corruption. The government is doing well because we Westerners send them tens of billions of dollars a year. Without that, the so-called optimism there would probably match the reality that they’re a financial basket case. If you were to send me a thousand bucks a month to band-aid my financial trouble – I’d be optimistic, too.

43% think house prices will rise in the coming year. If it’s respondents in Vancouver or Toronto, that makes sense. I don’t also mean to pour cold water on it, but the reality is that the new mortgage laws will make that next to impossible. You now need a buyer with $150,000 higher income to buy your home. Or, if you’re a buyer, you need to find a home $100,000 to $150,000 less than you could buy last year. In fact, there have already been comments from some federal government people they’d be prepared to re-visit these changes if need be.

And if optimism is high now – wait until the numbers come out after recreational drugs are legal. The high could be much higher…