Trade fight, tariff threats sapping Canadian confidence

Canadians are feeling beaten down after months of wrangling over U.S. trade, with pessimism about the economy reaching the highest since the last recession, telephone polling shows.

Some 45.6 percent of respondents said the economy will be worse in six months, the highest month-end reading since 2009, according to the survey conducted by Nanos Research. The figure has surged from 27.8 percent in May and more than doubled this year.

Economic pessimists outnumber optimists by three to one, a stark imbalance given unemployment is near record lows and the housing market appears to be stabilizing after years of price escalation. Tit-for-tat tariffs on steel and aluminum, and U.S. President Donald Trump’s threats to restrict automobile imports are casting a bigger shadow. Signs of a breakthrough on the North American Free Trade Agreement did little to dispel the gloom.

The Bloomberg Nanos headline confidence index fell to 54.7 in July from 54.9 in June, holding near a two-year low. The decline was caused by a combination of a plunge in the Expectations measure tracking the economy and real estate, and stability in the Pocketbook metric covering personal finances and job security.

The confidence index for homeowners has reached a 12month low, even with the Bank of Canada saying new regulations are working to curb excessive speculation in the Toronto and Vancouver housing markets. About 13 percent of respondents expect real estate prices to fall, the highest share this year.

The polling is based on 250 random phone interviews done each week. The latest results through July 27 have a margin of error of plus or minus 3.1 percentage points, 19 times out of 20.

This week may bring more clarity on the economy, with Statistics Canada reporting May gross domestic product data Tuesday.