Think kids these days are getting too much screen time? There’s another demographic struggling to put down their phones: Baby Boomers. As one 83-year-old put it: “I’m so attached to this thing. If I leave the house and forget (it), I’ll go back.”1

We’re staring at our screens on average 6 hours a day, and arguably more as we age.2 Yet, this may not be good for our economic health. One reason is that the constant connectivity may be skewing our economic perceptions, and the media is playing a central role. While it has always tended to prioritize negative news to grab attention, this negativity has increased.3 Today, we are being fed negative news at a greater frequency, with access 24/7 via our phones — no longer limited to the morning paper or evening news.

A recent study suggests that we would be better served if the media was more positive. Using the archives of almost two centuries of newspapers (while not establishing causality), it concluded that positive news-based economic sentiment can predict economic growth, even more than economic growth drives sentiment.4 However, this sentiment has significantly declined despite far fewer economic setbacks. Research by former World Bank economist Charles Kenny from nearly a decade ago supports this stance: optimism correlates with faster productivity growth and stronger economic performance. Kenny once suggested, “Even if our pessimism were grounded in reality, studies suggest it would be better for the economy if we pretended to be optimistic.”5

Today, there are reasons for optimism. We’ve achieved tremendous progress in this economic cycle. Canada’s household net worth has surged by over 42 percent since the onset of the pandemic — an unprecedented rate.6 Wealth, wages and employment7 are higher today than they were before the pandemic. We are also living through a pivotal time due to the availability of big data, high-powered computing and advances in artificial intelligence (AI). Market strategist Ed Yardeni believes we’re at the onset of a “productivity boom” akin to the Roaring 20s. While U.S. equity markets have handsomely rewarded many technology stocks, AI’s productivity and growth potential are expected to reach far beyond the tech sector — as the saying goes, a rising tide lifts all boats.

The long-awaited recession in the U.S. appears unlikely for now, with U.S. GDP suggesting robust expansion. Canadian economic output has been comparatively sluggish, but let’s not forget the central banks’ objective in raising interest rates was to slow growth to curb inflation. Economic resilience has largely surpassed expectations partly due to low unemployment, which continues at relative lows. Canada’s stock market has trailed due to its more cyclical nature, but is poised to benefit from interest rate stability and declining long-term rates. Corporate earnings may be driven by higher margins through efficiency gains and lower input costs, particularly as inflation moderates. The strength of our largest trading partner should help provide near-term momentum. And, the potential for interest rate cuts is expected to provide tailwinds to equity markets.

Looking ahead, these factors may be good food for thought — and a reminder to not overlook the economic power of positive thinking.

1. https://www.wsj.com/articles/who-is-more-glued-to-screens-grandkids-or-grandparents-11657976401: 2. https://pubmed.ncbi.nlm.nih.gov/37037046/; 3. https://www.bbc.com/future/article/20200512-how-the-news-changes-the-way-we-think-and-behave; 4. https://www.nber.org/system/files/working_papers/w32026/w32026.pdf; 5. https://www.bloomberg.com/news/articles/2015-01-08/how-optimism-strengthens-economies; 6. Statistics Canada Table: 36-10-0580-01; 7. Based on annual unemployment figures.