The Bank of Canada released results from the Canadian Survey of Consumer Expectations for the fourth quarter of 2024, based on an online panel conducted from October 31 to November 20, 2024 with follow-up phone interviews from November 25 to December 3. Consumers reported improved financial health and stronger spending intentions, which the survey links mainly to recent interest rate cuts and expectations of further cuts, while confidence in the labour market weakened. Fewer respondents said they are spending less or plan to reduce spending, and for the first time since 2021 consumers expected their spending to increase faster than prices over the next 12 months. Access to credit was seen as easier and expected to keep improving, but the perceived risk of missing a debt payment rose, particularly among renters. Mortgage holders continued to express optimism about renewals, with fewer expecting higher payments and those anticipating increases still reporting confidence they can cope; home-buying intentions also increased, although respondents planning to buy over the next 12 months assigned about a 50% probability of following through. High prices for goods and services, economic uncertainty and elevated housing costs continued to weigh on spending decisions, with nearly half expecting a recession in the coming year and many remaining uncertain about the economic outlook. Labour market sentiment fell to slightly below the survey average as the reported probability of job loss increased and job searches lengthened, with younger consumers and those with a high school diploma or less reporting more weakness than other groups. Wage growth expectations were unchanged from the previous quarter and remained above pre-pandemic levels, driven mainly by expected cost-of-living adjustments, while public sector wage growth expectations declined for a second quarter. Inflation expectations continued to fall, with one-year-ahead expectations close to historical norms and two- and five-year expectations back to pre-pandemic levels and aligned with the Bank’s inflation target, although perceptions of current inflation and disagreement about the inflation outlook over the next year remained elevated.
Bank of Canada 2025-01-20
Bank of Canada publishes 2024 Q4 consumer expectations survey showing improved financial health and inflation expectations near historical norms
The Bank of Canada's Q4 2024 Canadian Survey of Consumer Expectations shows improved financial health and spending intentions due to recent and anticipated interest rate cuts, despite weakened labour market confidence. Consumers expect spending to outpace price increases for the first time since 2021, with easier credit access but rising debt payment concerns. Inflation expectations have decreased, aligning with the Bank's targets, although perceptions of current inflation remain high.