Canadian economic sentiment is gloomy as the year endsCanadian end-of-year economic sentiment is bleak, according to Sun Life Financial’s annual check-up survey.

Almost two-thirds of Canadians (63 per cent) surveyed say they are concerned that the U.S. fiscal cliff – “a series of tax increases and spending cuts that could be implemented in the U.S. in the new year” – will impact Canada’s economy.

“Along with high debt levels and a slowing real estate market in Canada, the fiscal cliff situation in the U.S. is giving Canadians another reason to worry about the Canadian economy,” says Sadiq Adatia, Chief Investment Officer, Sun Life Global Investments.

How the Fiscal Cliff Could Affect Canadians

The Republicans and Democrats are currently trying to hash out a plan to avoid the fiscal cliff… but Canadians don’t seem convinced.

In the event a deal isn’t reached, Canada’s mining and energy sectors, which rely heavily on the U.S., would certainly feel the effects, according to Paul Taylor, chief investment officer for fundamental equities at BMO Asset Management.

“We are very much dependent on energy and materials which represent, of course, nearly 50 per cent of the Canadian equity market by market cap,” Taylor told the Canadian Press. “And with slower U.S. – and read from that slower global economic activity – you would have to expect that the price of base metals and energy on which we depend so heavily would be affected negatively and they would certainly lose a bit.”

Ontarians are particularly concerned about the effects – the survey found 70 per cent fear an impending recession  as a result of an unresolved cliff.

But, It’s Not All Bad News

In addition to worrying about the trickle down effects of the U.S. economy, 54 per cent of Canadians feel they are not in better financial shape then they were last time this year – but that could be in for a change.

RBC’s latest Economic and Financial Market Outlook says the Canadian economy could see a gradual improvement, as elevated demand for commodities from China could boost the countries GDP. In the event the fiscal cliff is avoided, stronger U.S. demand is imminent.

Eastern Canadians More Pessimistic About Economy

Ontario and Quebec seem the least convinced – 31 per cent of Ontario residents, and 28 per cent of Quebecers are more likely to have a negative stance on the economy, compared to the national average of 26 per cent.

Sixty percent of Ontarians and 57 per cent of Atlantic Canadians also say their economic standing has not improved since this time last year, compare to 54 per cent nation-wide.

Of course, the dour mood is hardly a surprise, given the economical roller coaster Canadians have experienced since 2008, and recent slower-than-expected GDP growth – the economy only saw a 0.6 percent annualized growth in the third quarter of this year.