A 50-bps Bank of Canada Rate Cut May Wash Over Financially Stressed Consumers, Survey Suggests

Financial Stress in Canada Reaches a Boiling Point

Canadians are so financially stressed out that the expected relief from a jumbo-sized rate cut by the Bank of Canada could just wash over them, an ongoing survey of people’s outlook suggests.

The Fallout from Pandemic-Era Inflation and Sticky Higher Prices Remains Significant Pain Points for Consumers

The fallout from pandemic-era inflation and sticky higher prices remains "significant pain points for consumers," John Wright, executive vice-president of Maru Public Opinion, said in a release highlighting households’ outlook for finances and the economy since 2020.

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The Survey Says: Housing Affordability is Not Just a Concern

But for many Canadians, it’s not just about housing affordability. "This inflationary pressure extends beyond housing, affecting sectors such as cars, groceries and manufactured goods, indicating a structural economic issue unlikely to be resolved by simply lowering interest rates," Wright said.

Maru’s Survey Reveals Grim Outlook on the Economy

The survey found that:

• 50% of people plan to save for retirement over the next two months, down from 56% in the previous survey.
• 42% believe their local economy will improve, compared with 45% previously.
• 61% said they will have more than two months of savings on hand if an emergency cost arises, down from 64%.
• 10% said they intended to buy a house, compared to 13%.

Another Maru Poll Uncovers Further Evidence of Severe Affordability Stress

A poll of residents of Vancouver, Calgary, Edmonton, and Toronto uncovered further evidence of severe affordability stress. Among the most significant issues cited were:

• The cost of living
• Affordable rent and home ownership
• Health care

Seven in 10 People Feel Their Cities are Unaffordable

Seven in 10 people indicated they feel their "cities are unaffordable," while 84% agreed it was "too costly to live and work in these urban areas."

Canadians’ Outlook on the Economy Remains Firmly Stuck in Negative Territory

For now, Canadians’ outlook on the economy remains firmly stuck in negative territory, with 63% indicating they think it is moving in the wrong direction, pushing the Maru Household Outlook Index down to 89 from a previous reading of 90.

The Base Number for the Index is 100: A Result Above 100 Indicates Optimism While Below 100 Indicates Pessimism

Maru compiles its household index each month by asking a panel of about 1,500 people a series of questions about the economy’s prospects over the next 60 days.