Economy

Canadians’ outlook on their finances, economy went from dark to darker last month, poll shows

Published

2 years ago

November 8, 2022

‘Bleakest and most biting outlook that I have seen since we started this’

Slower growth, elevated inflation and rising interest rates are making households feel vulnerable. Photo by Peter J. Thompson/National Post

Canadians grew more pessimistic about the economy last month, according to a new sentiment gauge that tracks households’ feelings about where the economy is headed and the state of finances.

Maru Public Opinion’s Canadian household outlook index — shared exclusively with the Financial Post — fell to 87 in October from 93 in September, a six-point drop indicating that Canadians’ mood around economic matters has soured considerably after perking up slightly as summer turned to fall.

“What I am seeing is the bleakest and most biting outlook that I have seen since we started this and for many years previous,” said John Wright, Maru’s Toronto-based executive vice-president.

Wright found that 70 per cent of respondents believed the economy was “on the wrong track,” a significant jump from 65 per cent in September. The result suggests higher interest rates and increased talk of a recession are weighing on the public mood. The last time any of the survey participants had anything good to say about the Canadian economy was back in November 2021, when 54 per cent said they approved of its trajectory.

Maru Public Opinion, a subsidiary of global research firm Maru Group, comes up with its household index by asking a representative panel of about 1,500 people a series of questions designed to probe how they feel about the economy’s prospects over the next 60 days. The most recent poll was conducted Oct. 31 and Nov. 1. Maru started tracking Canadian households’ outlook in February 2021. The baseline for the index is 100. A score below 100 indicates negative sentiment, while a score above 100 is considered positive.

There has been little good economic news of late. In its fiscal update released last week, the federal government downgraded its outlook for economic growth this year to 3.2 per cent from a previous estimate of 3.9 per cent. It also drastically cut its projection for 2023, and now expects the economy to grow only 0.7 per cent from an earlier forecast of 3.1 per cent.

Under a downside scenario, Ottawa said GDP could contract by 0.9 per cent next year.

Inflation is a major reason for the downbeat outlook. The consumer price index for September, the most recent reading available, came in at 6.9 per cent, well above the Bank of Canada’s target of two per cent. Given inflation’s tenacity, the Bank of Canada deployed another outsized interest-rate increase in October in a bid to cool demand that policymakers say exceeds suppliers’ ability to keep up. The benchmark rate is now 3.75 per cent after starting the year near zero.

Slower growth, elevated inflation and rising interest rates are making households feel vulnerable.

For the first time since Maru started asking about personal finances in July 2020, a small majority (53 per cent) of Canadians said that in the next 60 days it was likely that they would worry about their personal and family daily finances. In September, 47 per cent said they had such concerns.

Younger Canadians aged 18-34 were most worried (67 per cent), compared with older age groups 35-54 and 55-plus at 55 per cent and 39 per cent, respectively. Almost 60 per cent of households making less than $50,000 said they were anxious about the next two months.

“Now we are getting personal financial anxiety. Now this is starting to come into your home, into your life,” Wright said. “Now, it’s crossing over into anxiety in 18-34 (year olds) with kids and variable-rate mortgages,” he said.

The bad news didn’t stop there.

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Economy

Energy stocks help lift S&P/TSX composite, U.S. stock markets also up

Published

17 hours ago

September 17, 2024

Anne Joseph

TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.

The S&P/TSX composite index was up 34.91 points at 23,736.98.

In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.

The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.

The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.

The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.

This report by The Canadian Press was first published Sept. 17, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Canada’s inflation rate hits 2% target, reaches lowest level in more than three years

Published

17 hours ago

September 17, 2024

Anne Joseph

OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.

The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.

Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.

Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.

The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.

The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.

“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.

Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.

“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.

The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.

The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.

A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.

Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.

Its key lending rate currently stands at 4.25 per cent.

CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.

The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.

This report by The Canadian Press was first published Sept. 17, 2024.

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Economy

Federal money and sales taxes help pump up New Brunswick budget surplus

Published

2 days ago

September 16, 2024

Anne Joseph

FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.

Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.

The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.

Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.

Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.

Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.

Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.

This report by The Canadian Press was first published Sept. 16, 2024.

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