Inflation is down, wages are up. Why are Canadians still frustrated with the economy?
Ragan points out that the government’s focus on improving statistics may not resonate with those still feeling the impacts of earlier economic hardships.
The federal finance minister is emphasizing improvements in Canada's economy post-pandemic, citing low inflation rates at 1.6%, declining interest rates, and consistent wage growth that has outpaced inflation for 20 months.
Despite these positive statistics, a recent analysis from RBC reveals a troubling economic disparity: the top 40% of income earners have captured 70% of wage growth over the past three years, while household spending per person has decreased.
RBC economist Carrie Freestone notes that low- and middle-income Canadians are dedicating a larger portion of their earnings to essentials like food and housing, contrasting sharply with higher-income individuals who continue to save significantly.
The interest rate hikes by the Bank of Canada have disproportionately affected lower-income households, increasing their debt burden, while wealthier individuals benefit from higher returns on their savings.
Economic experts, including Christopher Ragan from McGill University and Stephen Gordon from Laval University, highlight the ongoing pain felt by Canadians due to past interest rate increases and high living costs, despite recent reductions in inflation and interest rates.
Ragan points out that the government’s focus on improving statistics may not resonate with those still feeling the impacts of earlier economic hardships.
Finance Minister Chrystia Freeland has been actively communicating the government’s economic strategy and positive developments in weekly news conferences, but public sentiment remains skeptical.
According to David Coletto, CEO of Abacus Data, perceptions of rising prices for essentials have not shifted, and the Liberals struggle to bridge the gap with the Conservative Party, which holds a significant lead in public opinion polls.
As the Liberals hope the improving economic landscape will bolster their standing, Coletto warns that the government faces considerable challenges, with time running out to sway public opinion positively.
