Optimism goes bankrupt | La Presse

On this, Justin Trudeau is not wrong. The population is angry. Or, at the very least, worried.

The prime minister offered this hypothesis to explain the rise of the “populist right,” as he put it, in Canada, France and the United States. “There are some who see that people are anxious, and they decide to amplify these anxieties,” he said.

Since your time is precious, this column will put aside existential or marital anxieties to focus on a more measurable source of worry: money.

By examining the reports and surveys, some observations emerge:

• Canada has suffered less from inflation than other countries;
• Canadians don’t care about the previous statement;
• their financial situation is better than they perceive it;
• they are not irrational;
• and finally, those who fear running out of money are more likely to dump the Liberals.

But before we get into conjecture, let’s start with the numbers.

Between 2019 and 2022, purchasing power declined in most OECD members. Canada is one of the exceptions, however.

Purchasing power there increased by 5.4%. This places it in fourth place among the 31 countries studied. And Quebec is doing even better, with an increase of 8.1%.

To go beyond averages, the Research Chair in Taxation and Public Finance at the University of Sherbrooke (CFFP) examined different households (single person, couple with or without children, single-parent family, senior). And for each, three income categories were analyzed.

The following figures relate to the period 2019-2024.

In Quebec, only seniors living alone and with an income below average saw their purchasing power shrink (-4.4%).

In several other categories, there was a decline between 2019 and 2022, but it has since reversed.

Canada did less well. Here are the figures when Quebec is excluded from the results.

Single-parent families with incomes at or below average^⁠1 suffered a drop in their purchasing power (between -1.7% and -6.4%). Which is a lot when you’re already struggling. For couples with children with an income below the average, the drop was 1.1%.

In all other household and income categories, purchasing power has increased.

But there is a difference between our objective situation and our perception of it.

Starting in 2022, inflation slowed. But Canadians didn’t feel it. They still felt it was at the same level, or close to it. There is an “exceptionally large gap” between actual inflation and perceived inflation, CFFP researchers note.

This statistical overview is not enough to understand the frustration of voters. We must go beyond the numbers. After all, people do not invent this stress.

The proportion of Canadians often or always worried about money has jumped, an Angus Reid poll revealed last winter.^⁠2In 2018, it was 31%. In 2024, it reached 42%.

These findings are corroborated by a survey by Narrative Research published in May^⁠3Two out of three respondents say they are anxious about their finances. It is worse among women, who traditionally are more likely to vote for Mr. Trudeau.

This is not the only bad news for the Liberals.

There are several reasons given by those who do not support them. The conflict between Israel and Hamas is far down the list. The same goes for capital gains taxation or “woke politics.”

The second most common reason is Mr. Trudeau himself. The first is the lack of progress on issues that affect them every day, and the cost of living is at the top of these issues.

This is confirmed by another piece of data. We asked those who voted Liberal in 2021 and who now support a different party. They are twice as likely as the rest of the population to experience financial insecurity.

For the Liberals, changing their leader would not be a miracle cure. And giving people hope again will not be easy. In recent months, Mr. Trudeau and his team have made numerous announcements, particularly in housing, to reduce the cost of living. The needle in the polls has not moved, and they are wondering what else to do.

In addition to its impact on bills, inflation has psychological consequences. The classic approach in economics would be to say that people are irrational and don’t understand that inflation also increases their wages. But it’s more complicated, as recent work by Stefanie Stantcheva, a professor of political economy at Harvard University, shows.^⁠4who is inspired by his compatriot Robert J. Shiller.

Inflation undermines trust in institutions. People wonder whether central banks and the government are doing their jobs properly and whether their leverage will be enough to renegotiate their salaries. They feel that their standard of living is declining or stagnating. Or at least that they are advancing less quickly than others, especially rentiers whose assets are increasing in value.

In short, inflation breeds resentment. It contributes to anger against elites. And so it is a small part of the explanation for Mr. Trudeau’s unpopularity.

The Prime Minister is not wrong to note the effects of this anxiety. The problem for him is that even though he seems to have tried everything, he has not yet found the cure. Perhaps because he himself aggravates the symptoms.

^⁠1 The “lower income” category corresponds more precisely to 25^e income quintile. The other two categories used by the researchers are the 50th^e quintile and 75^e quintile.

Consult the study of the Research Chair in Taxation and Public Finance at the University of Sherbrooke

2. Check out the Angus Reid poll results

3. Check out the Narrative Research survey results

4. Read Stefanie Stantcheva’s report (in English)