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December 22, 2021

Why is Canada's consumer confidence so low?

Look, we get it. The recession was awful, particularly nasty for millions of Canadians.

Stock-photo-17885595-mmmmhhhBut even with an expectation that a recovery would not be 100 per cent smooth sailing, more than two years since the Bank of Canada officially declared the downturn dead we should be back on our feet, at the very least.

Though the latest Index of Consumer Confidence shows not only are Canadians worried about our economy, their confidence is at its lowest level in more than two and a half years.

In other words, we feel the same about Canada’s economy today than we did smack dab in the recession’s darkest days.

The obvious follow-up: why?

To gauge what’s going on here, we took a quick survey of recent news headlines to get behind what’s bumming out Canadians. To measure consumer confidence, the Bank of Canada polls how we feel about four key indicators: the economy; job creation; future major purchases; and personal finances.

*Bing: Tips to reign in your holiday spending

On the surface, we ought to feel real good. This is, after all, Canada, the country that’s become such a model for its performance during fiscal trials that Mark Carney, our BOC governor, was appointed to chair the newly-formed Financial Stability Board, a committee to make recommendations to changes needed on the global economic scale.

And, certainly, there are several sources that appear to back up our reputation. Not only has Canadian production capacity begun to approach pre-recession levels again, but our housing market remains strong, too. Add to that an economy that’s expanding at a rate far higher than analysts expected (and far higher than the U.S., as well) and you’d think Canadians would feel real well about things.

But then – ah, you say – this is a consumer confidence index, and if there’s anything we see from accompanying news stories, it’s that no level of national economic prosperity matters much if it’s not felt on the ground level.

Though retail sales are strong and Canadians had no problem shelling out big bucks on Black Friday and Cyber Monday, two key measures are weighing us down.

Number one: an unexpected slump in job creation, and number two: our households are getting poorer and taking on more debt.

The obvious silver lining here is that Canada’s peripheral profile looks strong. Our economy is what it is, one of the world’s best. The Job market isn’t the hottest right now, and though we’re spending now, we don’t appear ready to commit to major purchases in the near future.

Yet all that should come. And soon. This is, after all, our guy in charge.

By Jason Buckland, MSN Money



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

Jason BucklandJason Buckland

The modern-day MC Hammer of money, Jason can often be seen spending cash that isn’t his with the efficiency of a Wilt Chamberlain first date. After cutting his teeth as a reporter for the Toronto Sun, he joined the MSN Money team with...