Shrinking economy bad news for both Liberals and Conservatives: Nanos

As affordability becomes a key topic during the federal election campaign for all major parties, the news that the Canadian economy contracted in the second quarter is bad for both the Liberals and the Conservatives, according to pollster Nik Nanos.

On Tuesday, Statistics Canada reported that the economy contracted at an annualized rate of 1.1 per cent between April and June – the first quarterly contraction since the first COVID-19 wave lockdowns in 2020. To make matters worse, the agency also estimated another drop in real gross domestic product in July.

“The news yesterday that the economy had shrank would not be good for any incumbent government,” Nanos said on Wednesday’s edition of CTV's Trend Line podcast. “The last thing that you want is for the numbers to come out and to suggest that the economy is shrinking.”

Nanos said the Liberals called the election when they did because they were hoping to capitalize on good will from the Canadian public for their handling of the pandemic and the supply of COVID-19 vaccines they procured while getting ahead of future concerns about the economy related to the pandemic.

“This GDP number is bad for the Liberals,” he said. “It undermines one of the key pillars that they were hoping would be in place.”

This latest news also won’t help to restore Canadians’ faith in the economy, according to Nanos, who said the population is already feeling “grumpy” about it. He said the latest weekly Bloomberg-Nanos tracking on consumer confidence shows that.

According to the data, 37 per cent of Canadians believe the economy will get stronger (down seven percentage points from four weeks earlier), while 30 per cent believe the economy will get weaker, and about 20 per cent believe there will be no change.

“The trend in terms of consumer confidence has been dropping over the last couple of weeks and couple that with a drop or shrinking of the economy and the GDP, it is basically a one-two punch in terms of creating negativity, anxiety and concern among Canadians when it comes to the economy,” Nanos said.

And while the shrinking economy spells trouble for the Liberals, Nanos said the Conservatives won’t fare much better thanks to their dependence on economic growth in their platform. According to the plan, the Conservatives would be able to balance the budget without any cuts within 10 years.

However, the plan hinges on the assumption that there will be an annual GDP growth of roughly three per cent, which some economists believe is unrealistic, Nanos said.

“These GDP numbers don’t help [Conservative Leader] Erin O’Toole because if the economy is shrinking, and your fiscal plan is based on the economy growing, it’s hard to reconcile those two things, at least for average voters,” Nanos said.

O’Toole will need to defend his platform in order to maintain the “mini advantage” he has over Liberal Leader Justin Trudeau in Nanos Research’s latest nightly tracking conducted for CTV News and the Globe and Mail, which was released on Wednesday morning.

According to the data, the Conservatives are leading with 33.7 per cent support, followed by the Liberals with 31 per cent, and the NDP with 20.3 per cent. The other parties trail significantly behind with the Bloc Quebecois at 6.8 per cent, the People’s Party of Canada at 4.1 per cent, and the Greens at 3.5 per cent.

In terms of who Canadians prefer for their next prime minister, Trudeau has a slight lead with 29.2 per cent support, followed by O’Toole with 28.4 per cent, and NDP Leader Jagmeet Singh at 19.2 per cent. PPC Leader Maxime Bernier has 4.9 per cent support, just ahead of BQ Leader Yves-Francois Blanchet, and Green Leader Annamie Paul.

‘IT’S HOUSING, STUPID’

The economy, and more specifically housing affordability, is also a main topic of concern for Canadians living in the vote-rich Greater Toronto Area, Nanos said.

According to polling data commissioned by CTV News and CP24 that was released on Tuesday, housing is the number one priority for voters living in Toronto and the surrounding area and one that all parties will have to address if they want to win votes there.  

“More than four out of every 10 residents in the GTA unprompted, which means when they could say whatever they wanted, identify housing as their as their top concern,” Nanos said.

“What was it that one American strategist said, ‘It's the economy, stupid’?” Nanos said. “That's probably what GTA residents want to say to any politician from any stripe, ‘It's housing, stupid.’”

And although Toronto and the GTA are traditionally a Liberal stronghold, Nanos said it was interesting that when residents were asked who best understands the issues in their area, it was a three-way tie between Trudeau, O’Toole, and Singh.

“That means that there's also opportunity not just for Erin O'Toole, but for Jagmeet Singh. He's got a good brand. His brand is exceptionally strong among under 35s in the in the GTA and if he can get young people to get out and vote, it can be a bit of a game changer for him,” he said.

NANOS’ METHODOLOGY

A national random telephone survey (land- and cellular-line sample using live agents) of 1,200 Canadians is conducted by Nanos Research throughout the campaign over a three-day period. Each evening a new group of 400 eligible voters are interviewed. The daily tracking figures are based on a three-day rolling sample comprising 1,200 interviews. To update the tracking a new day of interviewing Is added and the oldest day dropped. The margin of error for a survey of 1,200 respondents is ± 2.8 percentage points, 19 times out of 20.

The respondent sample is stratified geographically and by gender. The data may be weighted by age according to data from the 2016 Canadian Census administered by Statistics Canada. Percentages reported may not add up to 100 due to rounding.