Majority of Canadians say they have cut spending in recent months: survey

Is Canada on the verge of a recession? Elke Rubach of Rubach Wealth shares her thoughts on where interest rates are headed in Canada and says the goal is to control inflation.

The majority of Canadians say they have cut spending in recent months, and two thirds of Canadians say they are stressed about money, according to data released by the Angus Reid Institute.

The research also found that more than half of Canadians can’t keep up with the cost of living.

"Fully four-in-five say they have cut spending in recent months by either trimming their discretionary budget, delaying a major purchase, driving less, scaling back travel and charitable donations, or deferring saving for the future," says a report by the independent research agency.

In a study of 2,279 respondents, 42 per cent said they are delaying a major purchase, 41 per cent said they are driving less, and 57 per cent said they are cutting back on general discretionary spending.

Some Canadians, however, are seeing more financial strain than others.

According to Angus Reid, Canadians in Saskatchewan and Atlantic Canada are 50 per cent more likely than those in other parts of the country to "use a sudden gift of $5,000 towards paying off debt" if given one.

The not-for-profit's research also indicated that people in Alberta and the Maritimes are more likely than those in other parts of the country to say they have been cutting back on spending in recent months.

Older Canadians, the findings suggest, report to being better positioned to "endure unforeseen expenses."

In the study, three-in-five respondents older than 54 said they could manage spending an extra $1,000 this month, "compared to two-in-five among their younger peers."

"Those in the 35-to-54 age group are least likely to be able to comfortably afford extra expenses," reads the report.

With a recent decline in the cost of gas and food throughout the country, economists have pointed towards a deceleration in Canada's year-over-year inflation, which slowed to 7.6 per cent in July.

Experts have also revealed that June saw a likely peak in the overall inflation rate, with the nearly 40-year-high of 8.1 per cent a result of monthly increases since June 2020.

Statistics Canada released data that showed a 35.6 per cent rise in gas prices in July compared to last year, which is substantially lower than June’s 54.6 per cent increase in fuel costs.

But Canadians are still feeling the burden of inflation, with food costs in July up 9.9 per cent compared to a year ago and that feeling could deepen with recession fears mounting.

RBC predicts that the Canadian economy is on track for a "mild recession" in 2023, a result of staffing shortages, jobless claims, and delayed economic ramifications of pandemic restrictions leading to GDP growth of less than 1 per cent.

Although this outcome is uncertain, Angus Reid reports that consumer sentiment is taking a hit, with 76 per cent of their study’s respondents saying they are "stressed about money."

As inflation hovers above the Bank of Canada’s two per cent target, the central bank is preparing to make its next interest rate announcement on Sept. 7.

METHODOLOGY

The Angus Reid Institute conducted an online survey from Aug. 8 to 10, 2022 among a representative randomized sample of 2,279 Canadian adults who are members of Angus Reid Forum. For comparison purposes only, a probability sample of this size would carry a margin of error of +/- 2.0 percentage points, 19 times out of 20.”