January 18, 2024
Canadians appear to be riding a wave of optimism about the national economy and their personal financial prospects, according to latest results of an ongoing survey tracking households’ views.
The December edition of the Maru Household Outlook Index found that almost 40 per cent of Canadians believe the economy will improve over the next two months — that’s up from 37 per cent in November and 33 per cent in October. At the same time, fewer households reported that their financial position has worsened.
“The index and contributing factors bear positive news … so it’s a good start to the year,” said John Wright, executive vice-president of Maru Public Opinion, in a release about the survey. Canada’s economic position remains uncertain. A number of major economic forecasters expect fourth-quarter growth to come in flat or show very modest gains, with similar predictions for the first quarter of this year.
Wright attributes the uptick in the outlook to a sense of “stability and predictability” people have taken from the Bank of Canada‘s pause on interest rates. “What it’s trying to convey is the whipsaw effect of high inflation being brought down by interest rates that produced a lot of chaos in people’s financial lives,” Wright said.
The Bank of Canada has held rates at its past three meetings after raising them to five per cent in July. “What they did was give people a chance to organize their lives,” Wright said. “(Consumers) crave predictability and stability. You want to know what you can manage.” The possible “reward” of interest cuts this year has also likely lifted moods, he said.
The rising optimism about the economy helped to boost other metrics tracked by the survey. More Canadians — 18 per cent versus 17 per cent, previously — indicated they would purchase a big-ticket items such as a car or furniture and just over half of people polled (51 per cent) said they would put money away for retirement, up from 48 per cent. A declining number, meanwhile, indicated their financial health worsened in December down to a 25 per cent from 28 per cent in November.
While the survey results bore some green shoots, the Maru Household Outlook Index remains in pessimistic territory. The index registered an 86, with anything below 100 reflecting negative sentiment and anything above indicating optimism. That was up from 84 recorded in November.
Wright said the economy isn’t out of the woods yet. “The lowest point (for the MHOI) was in March when the index was 83. It went down again in October. The question is whether it continues to rise in the next quarter. It’s headed in right direction,” he said. “There’s hope and optimism that things are picking up. We’ll see.” Maru’s survey of 1,528 Canadians was conducted Dec. 28-29, 2023.
