Consumer confidence is eroding across Canada, except in Ontario

The country's consumer confidence index fell to 71, 4 points last month, according to the Conference Board of Canada.

The consumer has the choice of price or quality.

Canadian consumers are feeling some anxiety about the economic outlook for the coming months. Inflation remains high. Interest rates too. Uncertainty looms over the depth of the looming recession. And the stock market crash is making investors nervous.

To weather the storm, Ying Xue Xiang says his financial advisor suggested he invest in a guaranteed investment certificate – so he could count on a safer return.

But it is too low, it brings us about 3%, so with inflation right now, which is higher, we are losing ground, explains the Toronto resident, who was hoping to buy a property soon with her partner.

“It's kind of hard to think about the future right now in Toronto.

— Ying Xue Xiang, Toronto resident, originally from Vancouver

Although they consider themselves privileged to have good jobs, inflation is eating away at their budget. Their rent went up $350 a month, an 11% increase. The couple decided to limit their outings and change grocery stores to buy cheaper food.

Faced with inflation, Ying Xue Xiang and her spouse limit their dining out and try to save as much as possible at the grocery store.

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The Canadian consumer confidence index fell 2.7 points in February from the previous month to 71.4 points, according to the latest Conference Board of Canada survey. In one year, this level of confidence has dropped by nearly 22 points.

“Confidence is still at very low levels [… ] and maybe it's because there is so much talk of a recession as people expect.

— Pedro Antunes, Chief Economist, Conference Board of Canada

However, this decline across the country is tempered by a certain renewed optimism among Ontarians. Elsewhere in the country, the consumer confidence index has fallen. The fall was particularly marked in the Atlantic provinces.

The Canadian consumer confidence index fell in February 2023, despite a slight resurgence of optimism in Ontario.

The strength of the labor market could explain this gap, argues the Chief Economist of the Conference Board of Canada. Ontario's economy created nearly 63,000 new jobs in January, which is reflected in the job outlook for consumers in this province.

It's a paradox . This is good news for households, but it worries central banks a bit, says Antunes.

Basically, adding jobs to our economy amplifies demand for goods and services, which contributes to higher prices. The Bank of Canada is still trying to control inflation in the country – which is certainly slowing, but still hovering around 6% – about three times its target.

Christina Thomas and her husband bought a property in Toronto in 2018 with an adjustable rate mortgage.

Christina Thomas and her husband, who are expecting their second child next month, fear that the central bank will decide to raise its key rate again this year. Rapidly rising interest rates have pushed up the Toronto couple's mortgage payments.

“Especially as parents, we have a lot of expenses, so it's true that if it continues to increase, I don't know what we will do. It is worrying.

—Christina Thomas, mother in Toronto

Although the Governor of the Bank of Canada, Tiff Macklem, says he is determined to stay the course in order to assess the cumulative effects of monetary tightening, his American counterpart intends to continue raising interest rates south of the border, which would have repercussions on the value of the loonie and the Canadian economy.

Bank Governor of Canada, Tiff Macklem, announced a pause in policy rate increases last January.

Richard Kempler, chief executive of the Fédération des gens d'affaires francophones de l'Ontario, argues that businesses are being hit on many levels – by declining consumer and investor confidence.

“On the one hand, there is a very strong demand for labor that employers cannot find and, on the other hand, there is a strong demand for workers. other side, we have a certain nervousness.

— Richard Kempler, Executive Director, Federation of Francophone Businesspeople of Ontario

Even companies that don't have a cash flow problem are tightening the bolts to cut out what isn't essential in order to get through, he adds.

< p class="e-p">However, the economic downturn is unlikely to last long, he said. It's the next six months, maybe the next nine months, but by next year we'll be out of this turmoil, Kempler believes.

Jean-François Démoré, founder of the financial advisory firm Innova Wealth Partners, in Sudbury.

Jean-François Démoré, portfolio manager in Sudbury, says the stock market tumble of the past few weeks is making investors nervous. The collapse of Silicon Valley Bank and Credit Suisse, among others, makes them fear the worst.

The founder of the firm Innova Wealth Partners explains that many start-ups took advantage of low interest rates at the start of the pandemic to borrow and finance their expansion plans, but the current economic environment reveals some flaws.

“The saying goes that when the tide is high, all the boats go up. Me, I add that when the tide recedes, we see those who are not wearing swimsuits. »

— Jean-François Démoré, Founder, Innova Wealth Partners

Mr. Démoré believes that such bankruptcies in the banking system can have a domino effect. In the financial system, it's so interconnected. There is always a risk of propagation, even for banks that were still very well capitalized, he says.

There is definitely a feeling of anguish. After hearing about the failure of banks like Silicon Valley Bank, says Torontonian Ying Xue Xiang. It scares me a little, that's for sure. But at the same time, I believe that the Canadian banking system is very sound.

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