After a snap election this week that saw Canadian Prime Minister Justin Trudeau’s government maintain its minority position in Parliament with few changes, the country now looks to the next phase of virus recovery.

But it’s proving to be an uphill battle. Hospitalization is ticking up across the provinces, signaling a fourth virus wave despite a national vaccination rate of nearly 70%, one of the world’s highest. Officials are again instituting mask mandates and gathering limits.

In Ontario, the most populous province, the government has implemented a vaccine certificate program. Customers of nonessential businesses, like indoor dining at restaurants and bars, meeting/event spaces, gyms, sport stadiums and a host of others, will need to provide government-issued proof of vaccination. This comes as the province reports about 300 hospitalizations this week.

Ontario’s proof-of-vaccination rules take effect https://t.co/7UJpZqulm9

— The Globe and Mail (@globeandmail) September 22, 2021

Much of the rest of the country has followed suit, with different passport programs in nearly all of the provinces. The anticipated return to the office is on hold as well in many areas.

The implementation of the passport requirements comes as reports from analysts suggest consumer sentiment is once again backsliding. Earlier this month, the Bloomberg Nanos Canadian Confidence Index fell to its lowest since April 2020. It’s down almost five points since a record high in July, when an increase in vaccination rates and officials lifting restrictions instilled optimism.

Meanwhile, recent data shows that inflation across Canada reached 4.1% in August, the highest since 2003. Groceries, gas and housing are all on the uptick, which puts pressure on Canadian consumer sentiment.

The national debt also soared during the pandemic as a result of COVID emergency aid. It’s poised to hit $1.2 trillion for fiscal year 2021-22, according to the Parliamentary Budget Office. The Liberals have proposed nearly $80 billion in additional spending over the next five years to jumpstart the economy.

Like the U.S., Canada is also facing staff shortages in key industries like healthcare and hospitality, putting continued strain on the labor force that does show up and hampering business recovery. Mat Flosse, the owner of Meatings Barbecue in Gloucester, ON, told the Ottawa Citizen that due to staff shortages, his restaurant is now open only Wednesday through Friday, when it used to operate seven days a week. He and other restaurant owners across the country are trying to fill spots by offering more pay, but to no avail.

How can restaurants win back staff? Ottawa labour shortage persists despite pay raises, benefits https://t.co/IiWJ70aqmP

— Ottawa Citizen (@OttawaCitizen) September 17, 2021

“It’s the worst,” Flosse said. “We’re trying to get in as much revenue as possible to make up for our losses [during the lockdowns].”

Meanwhile, the U.S. has extended nonessential travel restrictions at its land borders with Canada and Mexico. They were set to expire on Sept. 21 (and Canada opened its border to fully vaccinated Americans on Aug. 9), but the American government has extended them each month since March 2020. The same does not apply for air travelers, but the land border restrictions have significantly impacted cross-border tourism. Soon, the Canadian government will mandate the vaccine for all commercial air travelers and train passengers.

In the promo industry, Scott Hulbert, managing director of ideavation (asi/229801) in Toronto, says business has largely stayed the same these past few months: The clients who’ve spent money on promo during the pandemic continue to spend, while those who haven’t are still sitting on the sidelines and buying nothing.

“They’re taking a wait-and-see approach,” he says. “So many businesses aren’t back to normal. They can’t open or they don’t have any business to open for. There’s confidence, but we’re still uneasy. Clients are watching their budgets closely, especially now as we head into cold/flu season.”

They’re also concerned about the economy, which is showing significant pressure points. Staff shortages are a big one, which has also been affecting promo. “Housing prices are off the charts,” says Hulbert. “We’re now one of the most expensive places to live in the world. The government is printing money but not worried about balancing the budget or controlling the debt. They have no economic plan and things are out of control.”

While Hulbert says vaccine passports are a tool to try to recover economically, the burden will rest on smaller restaurants to “police” people at the door. “You have part-timers and teens at the front having to say, ‘Sorry, you can’t come in,’ ” he says. “That’s very difficult. The big box stores will stay open no matter what.”

“There’s confidence, but we’re still uneasy. Clients are watching their budgets closely.” Scott Hulbert, ideavation

It’s causing palpable tension among Canadians. Amanda Dudek, owner of A Dudek Promotions (asi/101207) in Maple, ON, says it’s been difficult to watch. “I feel like Canada is a house divided right now,” she says. “It’s certainly become a ‘which side are you on’ kind of place, from both pandemic and political standpoints after the snap election.”

While things slowly get back to a semblance of normality for her personally – her kids are back in the classroom – she’s still worried about the lack of sales heading into the holidays. “I haven’t seen enough uptick in Q4 orders,” she says. “It’s concerning considering the ridiculously long lead times because of staff shortages. I’m trying hard to communicate the urgency to my clients, but they’re not quite there yet. My fear is that they’re going to make their decisions when it’s too late to meet holiday deadlines.”

Clients of Richmond Hill, ON-based Innovatex Solutions Inc. (asi/231194) are ordering earlier this year and sales have continued to increase over the past year. But CEO/founder Ann Baiden is concerned about division regarding the vaccination and passports and a longer road to full economic recovery.

“Our clients are looking at strategies to fill gaps in brand awareness and loyalty due to canceled events and inventory shortages,” she says. “Q4 is going to be interesting and will definitely take some strategizing, but the reality is we aren’t going to know until we get there.” 

Hulbert says kitting is still very popular, as many companies put returning to the office on hold. “Employees want hybrid models now,” he says. “Much of the return won’t be until 2022. In promo, there have been a few Q4 open houses, roadshows and reps back on the road, but I think it’s going to be another year without holiday parties. I’m optimistic for a boom in the fourth quarter, but can the supply chain keep up?”