Yahoo Finance Most Canadians expect a recession to hit in coming year, new survey finds
Canadians have also been saving less in the wake of higher inflation, interest rates
Canadians are concerned about the state of the economy, a new survey has found, with more than half expecting the country will go into a recession within the next year.
That's according to software company Dye & Durham's latest quarterly Canadian Pulse Report, a survey that gauges consumer sentiment on the economy, real estate market and technology.
The survey of 1,001 Canadians found that 54 per cent expect the country to slip into a recession within the next year, while 32 per cent believe Canada is already in one.
This comes as high interest rates continue to weigh on Canadian finances. The Bank of Canada has hiked its benchmark rate 10 times since March 2022 as it tries to wrestle inflation back to its target rate of two per cent. While the central bank stayed on the sidelines when it issued its last decision in early September, leaving the rate at five per cent, a resurgence in the Consumer Price Index (CPI) has raised the odds of another hike.
"It's clear that many Canadians have been feeling pinched by this high interest rate environment and have seen their purchasing power throttled over the past year," Martha Vallance, Dye & Durham's chief operating officer, said in a news release.
"This has had a downstream effect on everything from housing and retail to legal services over the past 12 months."
According to the survey, 39 per cent of Canadians say they are in a worse place financially than they were a year ago. At the same time, 25 per cent say they are in a better place financially.
Canadians also reported spending more money this year on groceries (76 per cent), gas (65 per cent), car insurance (58 per cent) and home insurance (56 per cent). The higher costs have resulted in more than half (53 per cent) of those surveyed opting to put less money towards personal savings. Another 35 per cent say they are putting less towards retirement and Registered Retirement Savings Plans (RRSPs), and 45 per cent have reduced their charitable donations.
Inflation in Canada accelerated for the second month in a row in August, jumping four per cent as the price of gasoline surged. With gas prices continuing to rise through September, economists expect that CPI will remain elevated.
The Dye & Durham survey was conducted by the Angus Reid Forum between Aug. 16 and Aug. 18 and has an estimated margin of error of +/- 2.5 percentage points, 19 times out of 20.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
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