What do Canadian consumers expect in the nearest future?

Recently, the central bank released The Canadian Survey of Consumer Expectations, which focuses on respondents’ views concerning inflation, the labour market and household finances. The poll was conducted during the period from August 17 to September 1, 2020. It should be noted that COVID‑19 cases were up in certain provinces since then. The poll included various questions, including the influence of COVID‑19 on households’ savings.

Here are some of the most interesting results:

• Answers to questions on COVID‑19 show that Canadians are still quite cautious but they are more willing to participate in some economic activities than in Q2. Consumers predict a slow recovery. Meanwhile, the expectations for future employment vary sharply in different demographic groups.
• The forecasts on labour turnover, income and spending improved slightly following a decline of the second quarter of 2020. Such a change is consistent with the reopening of the economy.
• In terms of inflation, the Canadians’ expectations for the next year were down. This could be explained by a moderation in their forecasts about growth of food prices, as their views on food inflation shape their views on the overall inflation. At the same time, inflation expectations over two years were quite stable, and those for five years showed a small increase.

• Consumers’ expectations for labour market conditions improved, although couldn’t reach the pre-pandemic level, neither did the expectations about wage growth. Some respondents are more confident today about their job prospects: the likelihood of losing a job fell from its peak reported in Q2. Moreover, the respondents now say they have more chances of finding a new job in case they lose their current one.
• The forecasts for household income growth and spending growth were up slightly, with quite a small gap between them, as expectations of spending growth did not significantly exceed the forecasts for income growth. It means the Canadians are still very cautious.
• Consumer’s expectations for real estate price growth showed a rebound following a weak second quarter. The gains were reported in all provinces.
• Some respondents say their savings rose since the outbreak and they plan to keep most of it. In addition to it, they want to focus their spending on essential products and services, while reducing the spending on services involving in‑person interactions.