Home Economy Number of Canadians worried about their finances hits new high

Number of Canadians worried about their finances hits new high

by SuperiorInvest

55% of people surveyed in the Family Outlook Survey worry about their personal and daily finances.

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The number of Canadians worrying about their day-to-day finances hit a new high in January, according to the latest reading from an ongoing survey on financial well-being.

Fifty-five percent of people surveyed by Maru Public Opinion for its Household Outlook Survey reported they are worried about their personal and daily finances, up from 52 percent in December and the highest reading since the survey began tracking this measure in July. 2020.

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There were other notable signs of financial difficulties.

More people indicated they were having difficulty making ends meet: 41 percent in January, up from 38 percent the previous month. Additionally, one-third of survey participants said they relied on government benefits “to stay afloat,” an increase of four percentage points from the previous survey.

“People are going back to where they were when interest rates were low and they had savings in the bank,” said John Wright, executive vice president of Maru Public Opinion. “All that has disappeared.”

Now, interest rates are at a more than two-decade high of five percent. Canadians are taking on more debt, Wright said, citing data from credit rating agency Equifax, which found total consumer debt rose to $2.4 trillion in the third quarter of 2023, an increase of $80.9 billion. compared to the same period last year.

That has left consumers in a “mostly pessimistic” mood, a mood reflected in the Maru Household Outlook Index.

This month’s index is like an elevator stopped and hanging by a thread over a deep, dark pit.

John Wright

For January, the index registered 86, with anything below 100 reflecting negative sentiment and anything above indicating optimism. The Household Outlook Index has been stagnant since December 2021 and is slightly below its most pessimistic reading of 83, recorded in March 2023.

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“This month’s index is like an elevator stopped and hanging by a thread over a deep, dark pit,” Wright said in the news release. The index would be in “free fall” if not for some positive momentum recorded in some categories that fuel the index, including more people’s expectation that their local economy will improve in the next 60 days.

While that measure increased slightly, 67 per cent of Canadians still feel the economy is on the wrong path, unchanged from the previous survey. Additionally, 61 percent do not believe the national economy will improve in the next two months.

The mood reflected in the survey represents a radical change from December, when people seemed more optimistic.

Some pinned that optimism on expectations that the Bank of Canada would soon announce interest rate cuts. But at its most recent meeting, on Jan. 24, the bank kept rates at their current level, and Gov. Tiff Macklem indicated more recently that officials are in no rush to start cutting rates.

Despite the pessimistic outlook, the news is not all bad, Wright said. GDP in the final quarter of 2023 is likely to be stronger than expected, possibly allowing for a soft economic landing rather than a recession. The International Monetary Fund is calling for Canada’s economy to grow at the third-fastest pace among its advanced peers. And the labor market is resilient, while wages continue to rise.

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Still, Maru’s Wright thinks “there’s a huge disconnect between bankers, economists and people who manage money” and entry-level Canadians.

Wright said January can be a crucial month, but starting the year off on the right foot is made more difficult because deductions for the Canada Pension Plan and employment insurance restart for some.

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“Some people are fine. The average Canadian is not,” Wright said.

• Email: gmvsuhanic@postmedia.com

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