Self-fulfilling prophecy?

Did you catch the latest news, between chomps of turkey and Xmas cookies with tasty metallic sparkles on them?

The Canadian economy grew in the latest period measured (Oct), just as it did in the previous month. Yeah, not by much – only 1.2% annualized. But, kids, growth is growth. And so far in 2022, as we wind this sucker down, there have been no negative numbers. No single quarter of contraction, let alone the two required to define a downturn. Conclusion: there is no recession.

We’ve now had nine months of the most aggressive, macho interest-rate tightening cycle in memory, and things are still on the up. In fact, they’re peachy by many measures. Unemployment in Canada is at a decades-low. Tons of job vacancies. And look at wages. Economists at Scotiabank point out  incomes are now rising (7%) faster than inflation (6.8%). The pace of debt accumulation has slowed along with real estate sales. House prices are actually coming down. Even the federal deficit got a dose of Prep H and is shrinking.

Of course, stuff could change. Higher rates take time to ripple through an economy as they target inflation and a potential wage-price spiral. But the CB guys are still hoping for a soft landing – a gentle economic slowdown that corrals the rising cost of living without spiking the jobless rate and damaging corps.

Here’s the thing, though. Most people think the economy is pooched – and they have the power to make it so. Two-thirds of our GDP is based on consumer spending, and at this moment in time consumers are weirdly short of confidence. Most economists think if we do have a contraction, it’ll be shallow – maybe 1% or 2%. And it will be short – six months, likely. Maybe eight. But 2023 on balance will be a year of growth. Unless the funk spreads.

Check out the latest Leger poll, done for BNN (which you should never watch). It found 81% of Canadians are worried about recession and half are cutting back spending to prepare. Others are beavering down debt, staying liquid or asking for a raise in pay.

Most worried (84%) are homeowners, as opposed to renters (80%), many of whom – like our featured Blog Dogs of yesterday – are facing VRM bloat and trigger rates. Most significantly, almost four in ten think the recession will last three to five years. A fifth believe recovery will be five to ten years away. Seven percent (who apparently all live in the steerage section) say we will never get out of the soup.

Wow. Does this reflect social reality? Because if it does, and eight in ten of us are hunkering down for years of pain, then pain is what we’ll get – especially reflected in real estate Armageddon.

But wait. Leger surveyed 1,526 people from across Canada in an online poll. This pathetic blog recently asked similar questions to 4,179 folks, also from across Canada, and also through an online poll that was live for less than 24 hours.

As you may recall from the summary post (December 11th), a majority of respondents to the annual GreaterFool Blog Dog poll also felt a recession is likely in 2023 (65%). But there was a radical difference in expectations of what the contraction would look like. A majority (54%) said it would be short & shallow while almost a third (31%) believed any rough patch will be over in 2023. Against this 85%, only 14% expressed a fear recession would last for years.

As for the performance of assets, 98% of readers here think real estate will be lower in 2023 (half say it will tumble more than 20%) while almost three-quarters believe financial markets will advance in 2023 (only 27% say the bear market will endure).

The key questions: Will 2023 be better or worse. The score here was 72 to 28.

So this makes you wonder about a few things. Like, how reliable is polling on questions like these? If results are dodgy, why do media outlets make a big thing of them? And, do media stories on suspect polling results actually influence public opinion? Are we letting the wussy MSM talk us into a downturn by scaring people into turtling, instead of spending?

Or are the readers of this blog more just sunnier by virtue of their elevated financial status or merely through absorbing the wisdom and epic astuteness of these daily posts?

You must ask?

About the picture: “Here is our Miniature BerneDoodle named Molly,” write Roger and Sandra, “with her favourite ‘Squeaky Banana’ toy.  She is a bright, high-energy addition to the household, and certainly keeps us on our toes!