50% of Canadians Expect Their Household Income to Fall Behind Cost of Living in 2008

    Concerns about inflation and the weakness of the U.S. economy slam
    Canadians' individual expectations for 2008. Expectations for Canadian
    economy are cautiously optimistic, though at a new 24 year low, according
    to the Annual POLLARA Survey for the Economic Club of Toronto.

    TORONTO, Jan. 9 /CNW/ - Four in ten Canadians report having lost ground
in 2007, and fully one-half expect their household income to fall behind the
cost of living in 2008, amidst concerns that the U.S. economy will continue to
worsen and that Canada's inflation rate will soar. This finding is from a new
national poll released this morning by Michael Marzolini, Chairman of POLLARA
Inc., at the annual Economic Outlook Conference of the Economic Club of
Toronto, which was addressed by Mr. Marzolini and the Chief Economists from
Canada's five largest chartered banks.
    One-half of all Canadians expect their household income to fall behind
the cost of living, the most pessimistic personal outlook in 24 years, growing
18 points in only 12 months. Only 8% of Canadians expect their household
income to more than keep pace with the cost of living, while 37% expect just
to keep pace.
    While 65% of Canadians believe their country is currently in a period of
moderate growth, optimism for 2008 is cautious and restrained, with
31% expecting the economy to improve, and 26% feeling it will worsen - a
6-point increase in pessimism from last year. Though again the most
pessimistic finding in 24 years of tracking, Canada's economy is seen as much
healthier than the U.S. economy, which only 17% of Canadians expect to improve
in 2008. The majority of Canadians (61%) believe the U.S. economy will worsen
this year.
    Increased pessimism about the weakening U.S. economy, plus reduced
optimism toward Canada's employment situation, and a majority view that
inflation will increase in 2008, have combined to lower Canadians'
expectations. "This is not just a baseless prediction", reported Michael
Marzolini, "the number of Canadians who claimed they lost ground in 2007 has
doubled from the year before. Fuel and housing prices, and those of many
necessary consumer goods, are of greater significance to those who expect to
fall further behind this year."
    Marzolini also pointed to several social and political ramifications
inherent when the same people who are falling behind, see the economy as being
in a period of moderate growth. "Collectively we're doing well, but
individually we are not, and this presents some real public policy challenges
in this public opinion environment. There is a case to be made for placing
more spending power in the hands of people, and addressing the cost of living
issue that has the public spooked. There is a need for more economic
engagement, communications at least, on the standard of living issue and
productivity agenda. Steps like investment in infrastructure need to be taken,
and then effectively communicated as contributing to the future prosperity of

    In addition, the survey found that:

    -   The increased value of the Canadian dollar is perceived to have a
        negative effect (55%) on the Canadian economy, rather than a positive
        effect (27%).

    -   Despite this view, Canadians feel the higher dollar has had a
        positive effect (29%) on peoples' personal economic situation, as
        opposed to a negative impact (15%).

    -   Most Canadians believe that the value of the Canadian dollar is
        "about right". Only 22% see it as "too high", and 10% believe it is
        "too low".

    -   Only 7% believe that the value of the Canadian dollar is high
        relative to the U.S. dollar because of a strong Canadian economy.
        Some 33% see it as the result of a weak American economy, while the
        majority (55%) consider it to be a mixture of both.

    -   The value of the Canadian dollar will decrease in 2008, according to
        40% of Canadians. A further 22% expect the dollar will increase in
        value, while 31% believe it will not change.

    -   The national debt is expected to increase by 36% of Canadians,
        decrease by 38% and not change by 19% - the first glimpse of optimism
        on this issue 24 years of tracking, despite regular payments toward
        the debt this past decade.

    -   Taxes are expected to increase in 2008 by 43% of Canadians, decrease
        by 28% and remain unchanged by 24%.

    -   Canada's employment situation is expected to improve by 26%, worsen
        by 28%, and remain unchanged by 38%. Most of those pessimistic toward
        the job market reside in Ontario or Quebec. In Ontario, twice as many
        people expect employment to worsen rather than increase.

    The national sample of 4,589 Canadians surveyed for this study was
randomly selected from the POLLARA TownHall Online Panel between December 14th
and 21st, 2007. Data was weighted to ensure that the sample's demographics
reflect that of the actual adult Canadian population according to Census data.
The margin of error on a probability sample of 4,589 adult Canadians is
+/-1.5%, 19 times out of 20, of what they would have been had the entire
population been polled. The same survey is conducted every year for
presentation and discussion at a session of the Economic Club of Toronto
featuring Mr. Marzolini and the Chief Economists from Canada's five largest
chartered banks.

    POLLARA is Canada's largest strategic insights, market research and
polling firm, with offices in Toronto, New York, Ottawa, Vancouver, Montreal,
Bathurst and Caraquet N.B.
    The full results to this survey, complete with question wording, can be
found on the front page of the POLLARA website: www.pollara.com.

For further information:

For further information: Michael Marzolini, Chairman, POLLARA Inc.,
(416) 921-0090, mmar@pollara.com; Mark Adler, President, Economic Club of
Toronto, (416) 306-0899

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