The Bank of Canada holds the cards for a better year ahead after Canadians’ personal finances were hit hard in 2023, according to the latest version of a multi-year survey of household finances and the state of the economy.
People are now in a much worse situation than they were at the end of last year across a variety of metrics — from being able to make ends meet each month to feeding their family, the latest version of the Maru Household Outlook Index (MHOI) said.
“This survey is pocketbook oriented,” said John Wright, executive vice-president of Maru Public Opinion. “You can’t escape the fact that the majority are feeling really bad about the economy.”
He said all eyes in 2024 will be on the Bank of Canada, which holds the cards for consumer sentiment about their financial futures.
“The only institution that holds any sway is the Bank of Canada and people will be watching that very closely,” he said, adding that a signal for even a 25-basis-point cut to the current 5 per cent interest rate will lift consumer sentiment.
Until then, the list of financial trouble spots is long.
On the top line, 28 per cent said they are worse off than they were at the same time last year, an increase of four percentage points from a year ago, according to Maru’s November survey, and 37 per cent said they are struggling to make ends meet compared to 34 per cent last year.
Another 19 per cent, up from 12 per cent a year ago, said they don’t have the means to buy what they need for themselves or their family, and 57 per cent said they don’t have enough saved for the future compared to 64 per cent last December. Just 59 per cent say they earn a livable wage, down from 64 per cent in 2022.
More people are also afraid of losing their jobs — 14 per cent compared to 11 per cent last year — reflecting the deteriorating labour outlook and slowing economy.
Amid clear signs of economic deterioration, MHOI remains stuck in pessimistic territory at 84 — just above the lowest reading since its inception in April 2021 — but well below the reading of 89 in November 2022. Anything below 100 on the index reflects negative sentiment and anything above indicates optimism.
More people have had to put the brakes on holiday spending, too, with a separate Maru survey indicating that Canadians plan to reduce their spending by around 14 per cent. Those results mirror other surveys including one from accounting firm Deloitte, which found that people were planning to cut holiday spending by 11 per cent this year.
That pessimism is reflected in an ongoing, downbeat view of the economy. Two-thirds of those polled by Maru continue to feel it is not moving in the right direction and a similar number said they don’t think the economy will improve over the next two months.
“All in all, the data suggest Canadians will end this year with a bigger lump of coal in their stocking than they received in 2022,” Maru Group Ltd. said in a press release on Dec. 12.
Maru’s survey of 1,528 Canadians was conducted Dec. 1-4, 2023.
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