According to a new poll, Canadians were feeling a bit better about the economy heading into October, but only because more households had begun saving money.
In September, the Canadian household outlook index increased to 93 from 90 in August. The result suggests that the mood of consumers is not good because of high inflation and interest rates.
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As the summer turned to fall, Canadians were not enthusiastic about the economy, and any score below 100 is indicative of a negative sentiment.
Some 65 per cent of respondents thought the economy was on the wrong track, compared with 50 per cent who thought so a year ago.
John Wright, the Toronto-based executive vice-president of the company, said in a press release that there is an underlying pessimism on the economy within a large swath of households. There is an apparent growing group who have felt the pocketbook squeeze since May, but it's been more specific in the households of those who are middle-aged and older, likely experiencing either the impact of rising interest rates or battered investments.
There is a deep-seeded pessimism on the economy.
John Wright worked for the government.
A representative panel of about 1,500 people are asked a series of questions to find out how they feel about the economy. In the first week of October, the most recent poll was done.
The index hasn't been above 100 since the end of 2021, which was about the time inflation began testing five per cent, a pace of year over year price increases that Canadians had rarely seen since the early 1990s. The index fell to 92 in May and then to 88 in June before bouncing back over the summer.
Even though the unemployment rate has fallen, households have soured on the economy. The strongest labour market in history has been overshadowed by concerns over inflation. The consumer price index increased 8.1 per cent in June from a year earlier, the biggest increase since 1980.
Inflation fell to seven per cent in August. The reason so many people are negative about the economy is because wages are only growing at an average annual rate of about five per cent.
A lot of recession forecasts doesn't help Since March, the Bank of Canada has raised its benchmark interest rate.
If inflation and wages become unmoored to our two-per-cent objective, then we are going to need to slow the economy a lot more to get it back to 2%. We have been front loading our interest rate increases.
Canadian households may be doing some front-loading of their own.
Only 35 per cent of people think the economy will improve over the next two months, down from 40 per cent in the summer. The broader index gained strength because more of thePanelists said it was unlikely they would worry about their finances. 66 per cent of households said they had enough money to cover unforeseen costs over the next 60 days, compared with 62 per cent a month ago.
A multi-component index can detect silver linings in the black clouds. The elements that pushed the index slightly higher this month came from two related areas: more Canadians intent on socking away some savings so they have more than two months of savings to cover unforeseen costs or needs, and a similar increase in the amount of money Canadians have left over after a big storm
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