Canadian consumers’ cautious optimism
Canadians’ confidence in the economy moved back to the optimistic side of the ledger in the third quarter.
The Bank of Canada’s latest Canadian Survey of Consumer Expectations suggests the outlook has turned positive compared to the second quarter, but cautiously so.
Among the key findings in the third quarter report is a return to expectations that home prices will continue to increase. During the second quarter those expectations plunged to near zero, now they are back to just slightly below pre-pandemic levels.
The survey also suggests a change in the type of housing preferred by buyers, with a shift to “less crowded and more remote environments.” In other words, bigger homes away from urban centers. Many market watchers attribute this directly to the pandemic lockdowns and the accompanying surge in working from home.
Expectations for interest rate increases are virtually unchanged from Q2, but are down significantly from a year ago. This is, of course, is in keeping with the BoC’s stated policy of rock bottom rates until there is a sustained growth in the overall economy and inflation.
The consumer outlook for household income and spending have improved modestly but still indicate caution. Canadians say they are shopping less, but are doing more of it online. Compared to Q2, more people say they are cancelling or postponing major purchases. Lower spending and less recreational and social activity have led to greater savings for many consumers. Most indicated they will hold on to those savings as a safeguard.