Canadian business and consumer concerns about the economy have eased, but confidence is still shaky according to the Bank of Canada.
The Bank’s regular quarterly reports on business and consumer sentiment suggest worries about U.S. tariffs and trade are weighing on the minds of most Canadians. A growing number say tariffs are the most important factor affecting the Bank of Canada’s ability to control inflation.
The Bank’s newly introduced indicator of consumer sentiment posted its second straight quarterly decline in Q2. The Canadian Survey of Consumer Expectations shows about two-thirds of Canadians expect a recession within the next 12 months.
The CSCE indicator tracks consumer sentiment about job security, spending and financial health. It suggests worries about job loss have eased from the first quarter of 2025, but remain elevated. Those concerns, in turn, appear to have consumers pulling back on discretionary spending.
The slowdown in consumer spending is being felt by Canadian businesses. Although the mood remains weak, confidence has improved slightly. Just one-third of companies expect higher, tariff related costs, down from two-thirds in Q1. About 28% of firms expect to see a recession, down from 32% in the previous quarter.