The Bank of Canada’s latest Canadian Survey of Consumer Expectations indicates most Canadians see a recession as the most likely scenario for the economy in the next 12 months.
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But many are uncertain about where the economy and labour market are going. Consumers who are more uncertain are planning to spend less and save more as a precaution, said the Bank on Monday.
“Expectations for inflation one to two years ahead have fallen but remain well above their levels from before the COVID-19 pandemic. Consumers’ expectations for growth in prices of some goods have edged down, although their price growth expectations for services such as rent have remained high,” said the report.
“Most consumers think the Bank’s ability to get inflation back to target is hampered by high government spending and challenges with supply chains. Many people believe supply chain issues will be resolved in the next two years, and some think prices for affected products will fall. Those who expect high government spending to impact inflation believe it will continue to do so for a long time.
“High inflation and rising interest rates are putting pressure on consumers—and particularly on mortgage holders. In response, consumers expect to spend less on discretionary services—such as travel, restaurant meals and other social activities—than they did over the last 12 months.”
Despite uncertainty about the economy, the Bank said, workers view the job market as strong. Respondents, particularly those not satisfied with their current job, are confident they can find new work. Workers’ expectations for private sector wage growth are also near a survey high. But wage growth expectations remain below inflation expectations, and most workers do not see their wages catching up with recent inflation over the next year, it added.
The full report can be found here.
(Mario Toneguzzi is Managing Editor of Canada’s Podcast. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald, covering sports, crime, politics, health, faith, city and breaking news, and business. He works as well as a freelance writer for several national publications and as a consultant in communications and media relations/training. Mario was named in 2021 as one of the Top 10 Business Journalists in the World by PR News – the only Canadian to make the list)
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