The Liberals have done good things for your personal finances, but their failures loom large

For every complaint about the economy, there is a counternarrative.

You are viewing: The Liberals have done good things for your personal finances, but their failures loom large

Three years of high inflation have made it hard for some people to afford groceries and housing costs, but inflation is now back under control and recent wage hikes came in at twice the inflation rate. Buying a home is expensive, but construction of new homes has been strong lately and mortgage rates are down from peak levels.

“Vibecession” is a word used to describe the sour feelings people have about their finances and the state of the economy, and so is “me-cession.” The idea behind these terms is that economic misery is in your head to some extent, or maybe your gut. The numbers say we’re not doing too badly.

The disconnect between numbers and feelings has many causes, one of them being the federal government’s economic fumbling. The Liberals have done some good things for the country’s personal finances – more than you may remember. But the events of this week highlight their twofold failure in confronting what households are up against. There’s a lack of empathy, and a lack of leadership.

See more : A.Y. McDonald announces new CFO, VP of finance | Tri-state News

Both failings were on display this week, when former finance minister Chrystia Freeland resigned from cabinet just ahead of a scheduled release of the government’s annual fall economic update. Ms. Freeland said in her resignation letter that she was at odds with the Prime Minister over the economy and criticized the use of “costly political gimmicks.”

Ms. Freeland was correct about those gimmicks, specifically the two-month GST holiday that began last week and $250 payments for working people. With federal budget deficits running higher than projections and much uncertainty ahead for 2025, we can’t afford these measures. As an aside, the $250 cheques were not highlighted in the update and now seem to be in limbo.

While she was a truth-teller this week, Ms. Freeland has also exemplified the government’s odd detachment from the struggles in many households. Two years ago, she addressed the financial stress many feel by mentioning her family’s cost-cutting move to cancel the Disney channel. She later walked back that comment by referring to herself as a “very privileged person.”

Just recently, Ms. Freeland used the term vibecession in explaining the gap between how people are feeling and positives like falling interest rates and inflation. Vibecession is an in-the-know phrase right now, but it sounds arrogant when used by a finance minister. A better approach would be to acknowledge the pain some households are feeling, and then pivot to what’s being done about it.

The Liberals have actually done a lot, starting with the creation of the Canada Child Benefit eight years ago. Other measures include the elimination of interest on Canada Student Loans, the introduction of $10-a-day childcare and the first home savings account, and a 10-per-cent boost to Old Age Security payments for seniors aged 75 and up. The Liberals also got the provinces to agree on changes to the Canada Pension Plan that will provide enhanced benefits for retirees in the years ahead.

Where the government failed is in sustaining a narrative of caring and support for the financially vulnerable. Attention has been paid to affordability in fits and starts. Pressure builds, then the government belatedly reacts.

See more : Wall Street is betting the Fed will deliver a final 2024 rate cut and get more cautious about 2025

One of the big economic stories of 2024 has been the wide recognition that Canada has a productivity problem. The Bank of Canada says strong productivity leads to faster growth, more jobs and higher wages, yet the country has seen no productivity growth in recent years.

One way for the federal government to show leadership on the economy would be to adopt a two-pronged approach of helping those in need while also pledging to improve productivity as a way of building prosperity for all. The economic statement included a few productivity-related measures, but with only a cursory effort to explain why they matter to people feeling anxious about their finances.

In no way does the government deserve full blame for a vibecession. The many dramas of the past five years have left people feeling anxious, judgy and uninterested in complexities like the global inflation and interest rate trends that have driven economic developments as much as or more than government policies.

We just want to know what the people in charge of the economy are doing to make things better. So far, the federal Liberals have not delivered the needed reassurance.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.