Canadians are starting to feel the economic crunch as the Bank of Canada continues to try and combat inflation more stubborn than a toddler before naptime.
Driving the news: Half the respondents to Bloomberg’s consumer confidence survey said their finances have worsened in the past year (the most ever recorded) and over two-thirds expect the economy to crumble in about six months (now that’s just depressing).
This isn’t that surprising given that ~$900 billion in household wealth evaporated in the second quarter of this year, mostly thanks to a rapid depreciation in the value of homes.
- Some homeowners that have lost wealth are also struggling to pay their mortgages, and renters aren’t doing much better, spending an average of over $2000 nationwide.
- Meanwhile, ~20% of Canadians have reported skipping meals to save money amidst financial distress, and more than ever, are resorting to food banks.
- Small businesses are also experiencing the lowest confidence levels since the early pandemic, as they battle debt racked over the past two years, per the CFIB.
Why it matters: Interest rate hikes are going to continue. It feels more pressing than ever that they actually do bring down inflation as more and more households fall behind.