Bank of Canada consumer expectations survey finds US trade conflict weakening labour market confidence and lifting short term inflation expectations

The Bank of Canada released the first-quarter 2025 Canadian Survey of Consumer Expectations, showing that escalating trade tensions with the United States are deteriorating household sentiment. Labour market confidence weakened sharply, consumers became more pessimistic about their financial health, and spending plans turned more cautious, while short-term inflation expectations rose as households anticipate a higher cost of living. Based on an online panel conducted from January 29 to February 19 with follow-up interviews from February 20 to 25, respondents reported a much higher perceived chance of losing their job, with job security concerns particularly pronounced in trade-sensitive sectors including agriculture and forestry, mining and oil and gas, and manufacturing. Wage growth expectations declined across both public and private sector workers, and the share expecting a recession in the coming year increased to 67% from 47% in the prior quarter; consumers also reported a higher-than-average probability of missing a debt payment and more negative views about access to credit. More households now expect little change in interest rates over the next 12 months, and a slightly larger share of mortgage holders plan to reduce spending to manage higher payments at renewal, while elevated housing costs, high prices for goods and services, and broader economic uncertainty continued to weigh on spending decisions.