A recent survey has revealed that an increasing number of people in Canada are expressing concern about their personal and day-to-day family finances. The survey, conducted by Maru Public Opinion, found that 55% of Canadians are worried about their financial situation, which is the highest reading recorded since the company started its Household Outlook Index four years ago.
Financial Woes on the Rise
The number of people concerned about their personal finances has been steadily increasing since early 2021, when 40% of respondents expressed such concerns. According to John Wright, executive vice-president at Maru Public Opinion, the acceleration of inflation is a major contributor to this trend.
"It’s something people haven’t been able to shake off," Wright said, pointing out that inflation rose from 3.1% in June 2021 to a peak of 8.1% a year later.
Record Number Struggling to Make Ends Meet
The survey also found that a record number of Canadians are struggling to make ends meet. In May, 43% of respondents said they were having trouble paying their bills on time, compared to 37% in March.
"This is a significant increase," Wright noted. "During COVID, many people didn’t have the expenses they had. Cars were sitting in driveways. They were working from home. It was bad with the virus, but pretty good with finances."
However, as the cost of living has increased, people are finding it harder to manage their finances.
"They’re into credit debt in a significant way," Wright said.
Bank of Canada Interest Rate Cuts
The survey was conducted just days before the Bank of Canada made its first interest rate cut in four years. On June 5, the central bank reduced its benchmark borrowing rate by 25 basis points to 4.75% from a two-decade-plus high of 5%.
While some may see this as a positive development, Wright believes that more cuts will be needed before people’s financial outlook improves.
"I know people will be pleased, but at 25 basis points, that’s not going to make a big impact on people’s lives," he said.
Household Outlook Index
The survey also found that the Household Outlook Index has slipped to 85 in May from 86 in April. The base number for the index is 100, with results above 100 indicating optimism and below 100 indicating pessimism.
Maru compiles its household index each month by asking a panel of people a series of questions about the economy’s prospects over the next 60 days.
Economic Outlook
On the economic front, 34% of respondents believe that the economy is on the right track, up three percentage points from the previous poll. However, a significant number of people – 66% – still think that the economy is on the wrong track.
"On the national front, nothing has changed, but on the personal front, people continue to struggle," Wright said.
Conclusion
The survey suggests that Canadians are increasingly anxious about their financial situation, and more interest rate cuts may be needed before people’s outlook improves. While some economic indicators suggest a slight improvement, many Canadians remain pessimistic about their financial prospects.
Recommendations
- More interest rate cuts may be necessary to alleviate financial stress for Canadians.
- Governments and policymakers should focus on addressing the root causes of inflation and promoting economic growth.
- Canadians should prioritize budgeting and saving to mitigate the impact of economic uncertainty.
