Canadian Consumer Confidence Hits Six-Year Low Ahead of Holiday Shopping Season, Leger Survey Finds [Interviews]

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A new survey by Leger indicates consumer confidence in the economy and in people’s household finances continues to erode which is not good news for retailers as they head into the busiest shopping season of the year.

Andrew Enns

“Relentless affordability pressures are affecting Canadians’ view of the economy. Two-thirds say the current state of the economy is poor and almost half say it will likely be worse six months from now. With this in mind, there is no surprise that almost a third of households will cut back on discretionary spending. This is not good news for retailers as we head into the holiday season,” said Andrew Enns, Executive Vice-President, Central Canada, for Leger.

Steve Mossop

“Rising interest rates and inflation have affected every Canadian to the point where economic confidence is at an all-time low in six plus years of tracking, and high housing prices exacerbate the situation …Unfortunately, there is not a silver lining in the outlook as there is nothing on the immediate horizon that will change consumer perceptions,” said Steve Mossop, Executive Vice-President, Western Canada, for Leger.

Some highlights of the study include:

  • Confidence in the national economy continues to erode. 66 per cent of Canadians say that their confidence in the national economy is poor or very poor;
  • Inflation remains the most important issue for Canadians. 24 per cent now believe that it is the most important issue, an increase of three points from August 2022. Housing affordability comes second, with 17 per cent of Canadians believing that it is the most important;
  • Confidence in current household finances continues to decline as well. 39 per cent of Canadians think that their household finances are poor or very poor, an increase of four percentage points since January 2023;
  • 32 per cent of Canadians expect that their discretionary spending will be lower in the next six months;
  • Predictions about discretionary spending reveal that more Canadians plan to pull back than spend more. This is poised to affect many spending categories, with the restaurant, electronics/computers, and clothing/footwear/accessories sectors to be potentially hit hardest; and
  • 23 per cent of Canadians think their household’s finances will decline in the future, while 15 per cent think they will improve. These perceptions are consistent across the country.

Mossop said the survey indicated a level of pessimism by Canadians on every level.

“If you look at some of the key indicators, whether it’s perceptions of the national economy, perceptions of their personal finances, spending intentions, worry, all of them are at all-time highs or all-times lows in almost every category. So it’s quite a dire situation that I haven’t seen for quite a while in my career,” he said.

Leger Canadian Economic Confidence Fall 2023

Mossop said three of the top four issues facing Canadians relate to economics. 

“And that hasn’t always been the case. Inflation is number one, housing affordability is number two, we’ve got health care number three and rising interest rates at number four. Followed by climate change. The economy is front and centre. Even pre-COVID it wasn’t the case that the economy really ran the gamut as far as the number of people that think about it on a top of mind basis.”

Mossop said household finances are a slightly different picture. The number of Canadians who say their household finances are in good or very good shape is 58 per cent. But it’s a reversal when you look at the state of the economy with 66 per cent who say it’s poor or very poor and just under 30 per cent who say it’s good or very good. 

“But even with those numbers the 58 per cent, the household finances, that’s down from an all-time high coming out of COVID, the economy was booming and in January 2022, 68 per cent said their household finances were in great shape.

“Often when we get to the what we call the bottom of the cycle and consumer perceptions, we tend to see glimpses of the horizon in the future. This time we don’t. It’s really quite shocking. The percentage of Canadians who think the Canadian economy will decline in the next six months is 47 per cent. Only 11 per cent think it will improve. That 47 per cent is the lowest I have here since March 2017.”

Leger Canadian Economic Confidence Fall 2023

Mossop said only 15 per cent of Canadians say their household finances are going to improve while 23 per cent say they will decline.

“The reason for this is really the lag effect of interest rates on mortgage holders. If we look across the country, we’ve got about 40 per cent of Canadians who have a mortgage of any type and of that in the mid-40’s (per cent) are on a variable rate. So what you’re seeing in this lag effect is as people renew their mortgages or anticipate the renewal of their mortgage they see themselves as being in the future worse off,” he said. 

Mossop said some categories of spending stand out including travel with 20 per cent saying they are going to spend more this year on travel. Health and wellness, electronics and computers are also high on the list of spending. 

Mario Toneguzzi
Mario Toneguzzi
Mario Toneguzzi, based in Calgary, has more than 40 years experience as a daily newspaper writer, columnist, and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, faith, city and breaking news, and business. He is the Senior News Editor with Retail Insider in addition to working as a freelance writer and consultant in communications and media relations/training. Mario was named as a RETHINK Retail Top Retail Expert in 2024.

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