The Canadian consumer has a nuanced perception of the economic forecast and its intersection with their personal finances. On one hand, inflation remains far and away the most prominent concern for the next six months, growing even more squarely into the focus for most consumers. However, this continued concern has not diminished consumers’ sense of optimism toward their personal anticipation of progress, with nearly 40% of consumers expecting to be better off financially one year from now.
The combination of personal optimism with a sober view of the overall economy has caused many consumers to hone in on general savings and debt reduction goals, putting off leisure spend and large purchase categories. With saving as the top consumer goal for the next three months, immediately achievable progress toward building balances and reducing debt will be prioritized over longer-term plans.
The Bank of Canada’s recent action to reduce interest rates provides an opportunity for brands to encourage consumers that they are finally rounding the corner toward a more favorable environment. Not only does this portend much-needed relief in the continually pricy housing market, but those looking for ways to reduce existing debt through refinancing loans will begin to see rate drop marketing.
This report looks at the following areas:
- Change in financial situation
- Financial outlooks for the next year
- Concerns for the next six months
- Recent financial changes made and planned financial goals
- Use of extra money
Although consumers remain laser-focused on the battle against inflation, reduced rates and optimistic outlooks foreshadow recovery ahead.
Patrick Rahlfs, Principal Analyst – Financial Services
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Executive summary
- What you need to know
- Consumer trends: key takeaways
- Nearly 40% of consumers anticipate an improvement in financial situation
- Graph 1: financial outlook for the next year, 2024
- Inflation has stifled progress in key areas
- Graph 2: recent financial changes, by three-month period, 2023-24
- Debt focus limits leisure spending opportunities
- Graph 3: use of extra money, by month, 2023-24
- Opportunities
- Empower optimistic newcomers
- Softening rates provide potential relief
- Promote a sense of urgency
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State of the Economy
- The Canadian economy rebounded in Q1 2024
- Graph 4: quarterly real GDP growth, 2021-24
- Inflation sits just below 3%
- Graph 5: Consumer Price Index change YoY, 2020-24
- Bank of Canada cuts rates for the first time since March 2020
- Graph 6: Bank of Canada interest rate, by month, 2020-24
- Unemployment slowly creeps upward
- Graph 7: unemployment rate, 2020-24
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Consumer Insights
- Change in financial situation
- An almost-even percentage of consumers were better-off vs worse-off
- Graph 8: financial situation compared to a year ago, 2024
- More consumers' financial situations have improved since the winter
- Graph 9: financial situation compared to a year ago, by month, 2023-24
- Young consumers made the most progress last year
- Graph 10: financial situation compared to a year ago, by age, 2024
- More than 50% of young men made financial progress last year
- Graph 11: financial situation compared to a year ago, by gender and age, 2024
- Momentum drives financial situations toward the extremes
- Graph 12: financial situation compared to a year ago, by financial situation, 2024
- Consumers' financial outlooks
- Consumers are cautiously optimistic about the next year
- Graph 13: financial outlook for the next year, 2024
- Recent progress has fueled further optimism among young consumers
- Graph 14: financial outlook for next year, by generation, 2024
- Black consumers are extremely optimistic for the next year
- Graph 15: financial outlook for next year, by race, 2024
- Top concerns
- Rising prices remain far-and-away the top concern
- Graph 16: top three concerns for the next six months, 2024
- The focus on inflation has only intensified
- Graph 17: rising prices as a top-three concern for next six months, 2023-24
- Inflation concern rises with age, while Millennials monitor interest rates
- Graph 18: top concerns for the next six months, by generation, 2024
- Financially struggling consumers are most concerned about rates
- Graph 19: top concerns for the next six months, by financial situation, 2024
- Recent financial changes
- Consumers attempt to cut back on, more than lean into, credit
- Graph 20: financial changes from the last two months, 2024
- Women have been more likely to reduce spend recently
- Graph 21: financial changes from the last two months, by gender, 2024
- Minor changes are becoming more prominent, signaling acclimatization
- Graph 22: minor changes due to inflation, by month, 2023-24
- Struggling consumers were forced to dip into savings and use credit
- Graph 23: financial changes from the last two months, by financial situation, 2024
- Financial behaviours
- Consumers hope to save and invest while travelling this summer
- Graph 24: recent and future planned financial changes, 2024
- Inflation has constricted many financial goals in the past year
- Graph 25: recent financial changes, by three-month period, 2023-24
- 25-34s are particularly ambitious
- Graph 26: financial plans for next three months, by age, 2024
- Use of extra money
- Saving is the core use of surplus money
- Graph 27: use of extra money, 2024
- Debt focus has chipped away at dining/travel spend
- Graph 28: use of extra money, by month, 2023-24
- New Canadians focus on major purchases before investing
- Graph 29: use of extra money, by years living in Canada, 2024
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Appendix
- Consumer research methodology
- Generations
- Abbreviations and terms
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