Bank of Canada introduces CSCE indicator and reports a second-quarter decline as tariff uncertainty weakens spending intentions

The Bank of Canada released the second-quarter 2025 Canadian Survey of Consumer Expectations, introducing a new CSCE indicator that summarizes consumer views on spending plans, the labour market and personal finances. The indicator fell for a second consecutive quarter as persistent tariff threats and related uncertainty weighed on spending intentions and increased caution among households. The labour market index was broadly unchanged after a sharp decline in the first quarter, with job-loss concerns still elevated but slightly lower, particularly among workers in sectors highly dependent on Canada–United States trade; around two-thirds of respondents continued to expect a recession over the next 12 months. Spending plans weakened further, with more consumers planning to cut spending due to inflation expectations, economic uncertainty, elevated housing costs and high prices; more than half planned to reduce spending on US goods and vacations in the United States, while about 60% intended to increase spending on Canadian-made goods and about one-third to vacation more in Canada, with most willing to pay up to a maximum of 10% more for Canadian goods. Short-term inflation expectations changed little after rising markedly in the first quarter, but respondents expected large increases in motor vehicle prices while expectations for essentials such as food, gasoline and rent declined; more consumers cited tariffs as the most important factor affecting the Bank’s ability to control inflation, and most expected tariff-related inflation effects to last less than five years.