Idea Lab with Alex Fallon: Challenging the norms of Saskatchewan business and economics
I remember the day when Mr. Kay, my favourite economics teacher, taught us about economic recovery. It could have been May or October, but either way it was cold – our economics classes were taught in the part of the school built in 1835 that barely had heat.
I remember him writing on the chalkboard: “The best indicator of economic recovery is ______.” And then he went around the class asking us to fill in the blank.
Will Wright, the cool guy, guessed GDP. Wrong.
James Morgan, the best soccer player, guessed unemployment rate. Also wrong.
And so it went on: inflation – wrong. Balance of trade – wrong.
Then it was my turn. Pressure was on. Me being me, I had to go for a guess that was a bit out of the ordinary (some things never change), so I guessed white paint. It’s a long story, but there’s an economic theory that says increased sales of white paint suggests an overall economic uptick. Since the paint is used for everything from home construction, renovations, cars, appliances and other things, it can point to an increase in consumer spending.
“Close, but not what I was looking for,” said Mr. Kay. Oh well, worth a shot.
Then he wrote out ten spaces on the chalk board and we started a game of economics hangman. I am not sure who guessed the right answer – although it was probably the smart kid, Lewis, who ended up going to the University of Oxford.
The answer, of course, was “confidence.”
Mr. Kay explained how confidence, specifically consumer confidence, was the key to economic recovery. If consumers have confidence about the overall state of the economy and their personal financial situation (i.e., income security, availability of jobs, etc.) they are more likely to spend, and if they continue to spend more, so the theory goes, the economy will grow.
Well, he probably explained it better and in more detail than I did, but what do you expect? This is Mr. Kay we’re talking about.
The interesting thing is that confidence is a feeling. You can’t see it and you can’t touch it, but you know it’s there (or absent, as the case may be). And perhaps, to a certain extent, you can manage the feeling to become a bit more confident – or at least cautiously optimistic. Although we’re still facing significant challenges in our economic recovery right now, especially in some sectors, there is light at the end of tunnel.
Despite any short-term uncertainty (e.g. variants vs. vaccination), there are many reasons to be confident about the state of the local economy in the long term: our robust agriculture sector, strong mining sector, tech sector that punches above its weight, combined with rebounding retail sales, a somewhat unexpected housing boom, a supportive provincial budget and significant investments in infrastructure and the science & innovation sector, etc…
All reasons to be confident in Saskatchewan. Confident in recovery. Confident in the fundamentals of supply and demand that bode well for Saskatchewan. Confident in each other, because the Saskatoon I know will push through to grow again – just like we’ve always done in challenging economic times. That, I am certain of.