Nearly half of all Canadians are feeling good about the nation’s economic future and are more willing to spend more money now than a year ago, according to a recent survey by Investors Group. The study finds that consumer confident has increased to 81.2 per cent from last year’s 79.1, as consumers feel better about their purchasing power, and are in the mood to spend.
“The fact that nearly half of Canadians think this is a good time to make a major purchase and also have a positive outlook for the economy over the next five years is encouraging,” said Gaetan Ruest, vice president of Product and Corporate Research at Investors Group.
But are we fooling ourselves? This may be a case where Canadians are tired of waiting for the economy to improve to make a major financial move. This new survey may also be an indicator that some Canadians are simply due to upgrade big ticket items, like cars and appliances. Here’s a look at the findings.
Optimism Highest Among 45 And Younger
The survey shows 48 per cent of Canadians are feeling good about the economic future for the next five years, but the ones feeling most optimistic are men under the age of 45. A sizable 37 per cent surveyed, however, feel the next five years will be a period of unemployment and recession. Optimistic survey takers are taking into account that, over the long term, Canada’s economy will improve and conditions will get back to normal, prompting them to believe they are more likely to see good economic times in the near future.
However, for the short to medium term there is no indication the economy will dramatically improve; that is evident in the latest round of interest rate and monetary policy announcements. Most vulnerable groups like seniors and single moms still remain at risk of slipping into poverty.
Almost One Third of Canadians Still Not Sure
While the number of people feeling good about spending on big ticket items is almost 50 per cent, 31 per cent are still holding off, meaning a large group of Canadians are still insecure about upgrading to a new car, renovating their kitchen, or buying a new house. With the economy not showing any robust signs of recovery, many may choose to wait it out for a few more years before they make a move on a major financial decision. With crisis like the U.S. debt ceiling deadline in two weeks still looming, Canadians should be uneasy that our biggest trading partner is still unsure of its economic future.
More Canadians See A Tough Year Ahead
The most optimistic seem to be the youngest. The survey found that those under the age of 25 are more likely to think the economy will improve in the next year, with 15 per cent believing the next year will be negative. That’s more than the 13 per cent that say things will be looking up this year. Its great that the country’s youth have such a positive outlook; it will definitely translate into hard work and better work ethic, but the fundamentals of the economy, stagnant interest rates, high unemployment and global debt crisis are still dragging us down and that should be on the minds of anyone concerned about the economy and its recovery.
Canadians Remain Pessimistic
According to Chairman Allan Gregg, “Canadians seem to want to believe that better times are ahead and even acknowledge that the economy – at least in abstract – is improving. More concretely however, most consumers respond that they feel they are not personally experiencing these gains.” Ruest agrees: “The small quarter-over-quarter increase in these measures also shows that Canadians continue to mix a healthy dose of caution with their optimism.” 18 per cent surveyed also say they are worse of financially then they were a year ago.
Canadians are feeling more optimistic about our nation’s growth, and generally the mood is positive – but the economy is still showing signs of weakness and is vulnerable to headwinds like the U.S. Debt ceiling and E.U. debt crisis. All of this should be considered before making any big-ticket purchases or major investments.