2019 is shaping up to be a gloomy financial year in the eyes of Canadian consumers. A number of recent polls indicate Canadians are feeling financial stress despite, what we are told is, a fairly robust economy.
The Outlook seems glum
An Ipsos survey – conducted in December, 2018 – suggests Canadians are more pessimistic about their own money than they have been in the last three years. While a healthy 71% of those surveyed say they feel “good” about their personal finances for the coming 12 months, that is down from 80% in the previous survey, and from 75% the year before that.
When asked about the Canadian economy as a whole, 59% say they feel “good” about what is to come. That is down from 65% a year ago, but up from 58% two years ago.
When asked to look back at 2018, 60% call their personal financial situation “good”, a drop of 4% from a year earlier. As for the overall Canadian economy, 53% say 2018 was a “good” year, down 2% from the 2017 survey.
Expenses are the worry
At least some of this malaise appears to be based on the respondents’ expectation that they will be paying more for most things in 2019. Significantly, 30% say they will be paying more for food. That is double the number from last year. Twenty-six percent predict their cost of housing is going to be higher, up from 18% a year ago.
Conversely, the number of respondents who expect they will spend less on entertainment/leisure and vacations is up by 7% and 8% respectively.
What the credit councillors found
In early January the Financial Planning Standards Council and Credit Canada commissioned a survey that asked Canadians what they thought will be in store for 2019. It found that 42% of respondents expect the economy will be worse this year, than last year. That number jumps to nearly half (47%) among those aged 55 and older.
Two-thirds worried about the big picture
On the broader question of “what worries them most” when looking ahead to 2019, 67% of those surveyed say they have worries when “forecasting their prospects for the year.” That leaps to 76% for those under 55 years-old and bumps up to 79% among respondents with children under the age of 18.
The key concerns
Debt is a significant factor in these broader concerns. More than a third (34%) of the survey sample say they are worried that increases in the cost of living will drive them deeper into debt. Nearly a quarter of the respondents worry about their growing debt-load and a similar number worry they will not be able to maintain their monthly payments. Fourteen percent are concerned about an unaffordable increase in their mortgage interest. Job losses also weighed on the respondents.
Encouragingly, perhaps, just 5% say they are worried about bankruptcy.
Bankruptcy: a growing concern
Figures from late in 2018 show a jump in bankruptcies in Canada. The figure for November topped 11,000 – a 5.1% increase year-over-year. Combined with October, the number of insolvency filings hit nearly 23,000 – the most for those two months since 2011. The vast majority of those filings are consumer proposals, but some market watchers see it as a warning that full-on bankruptcies will be increasing.
Still not prepared
In a similarly pessimistic vein a survey conducted for a B.C.-based credit restoration firm suggests nearly half of Canadians are not prepared for a financial emergency.
The online, Leger, poll indicates 49% of Canadians have no emergency savings to draw on. It also suggests emergency plans are weak or non-existent. Thirty-five percent of respondents say they will use a credit card to cover unexpected costs. That bounces up to 43% among those who identify as “getting by from paycheque-to-paycheque”. The survey also suggests that 53% of Canadians report falling into that category.