Canadians are feeling gloomy about their personal finances — and Generation Z is the gloomiest of all.
The Nanos Pocketbook Index, a measure of how people perceive their personal finances and job security, fell to 50 last week, matching its April 2020 low. It’s one component of the broader Bloomberg Nanos Canadian Confidence Index, which also gauges the public’s expectations about the economy.
Young people are driving the pocketbook index lower. For respondents aged 18 to 29 — who are mostly members of Gen Z, along with the youngest millennials — the index fell to 40, the lowest recorded in its 16-year history.
The youth index has been in free-fall since the last week of March, down 17 points in just five weeks. The recent sharp deterioration is worse than in April 2020, the depths of the pandemic recession, when Canada’s gross domestic product fell by 10.7 per cent.
Just 11 per cent of respondents of all ages said their personal finances have improved over the past year, the lowest going back to the inception of the Bloomberg Nanos survey in 2008, while 50 per cent say their finances have gotten worse.
In a technical sense, Canada has avoided a recession so far. That’s mostly due to explosive migration-led population growth, which has kept the economic pie from shrinking. The slices have grown smaller, however. On a per-capita basis, the economy has shrunk three per cent since September 2022.
Signs of strain among young people are especially visible in the labour market, where job gains have not kept up with the surging population. Youth unemployment has risen about four times faster than unemployment for all age groups.
In March, Canada’s unemployment rate was 6.1 per cent, up 1.1 percentage points since December 2022. Over the same period, unemployment among 15 to 29 year olds was up 4.3 percentage points to 10.9 per cent. New data for April will be released on Friday.
Financial difficulties among young people are a broader warning sign for the Canadian economy. And they don’t do anything to boost the country’s meager birth rate, since affordability concerns discourage many young couples from starting families.
Canada’s lack of affordability, particularly in the housing market, has led young people to turn their backs on Prime Minister Justin Trudeau. The under-30 crowd now largely favours the Conservative Party, a historical aberration.
Trudeau tried to win those voters back with his youth-focused April budget, but his polling numbers have continued to decline.
Methodology
Every week, Nanos surveys about 250 Canadians for their views on personal finances, job security, the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 telephone responses.
The poll has a margin of error of about three percentage points, 19 times out of 20. The range of error may be wider when talking about subsets of the overall population because the survey sample size is smaller.
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.
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.
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.
