Pessimism reigns in series of consumer sentiment surveys

Check in with your clients. Statistically speaking, there’s a good chance that at least a few of them are not doing well. Business owners are pessimistic (although that pessimism may be declining slightly), the majority of retail consumers surveyed say they’re worried about getting through the next year, and a large number are anxious about the situation. 

The findings come from three different surveys conducted by companies at the close of 2022 and start of 2023. The first survey from the Chartered Professional Accountants of Canada (CPA Canada) is distilled in that organization’s fourth quarter Business Monitor. The small survey of 425 senior executives found that pessimism about Canada’s economy dropped from 64 per cent in the third quarter of 2022 to 54 per cent in the fourth quarter. They add that business’ outlook remained stable, with 44 per cent saying they felt optimistic, up from 40 per cent in the third quarter of the year.

The number of those anticipating higher company revenues in the coming year rose 10 percentage points to 61 per cent during the period. Just 47 per cent said profits would increase, up from 42 per cent in the previous quarter. A notable 73 per cent say inflation is hurting their bottom line.

A larger survey of 2,001 Canadians over the age of 18 conducted for the TD Bank Group, meanwhile, found that 56 per cent are worried about getting through the next year. “Their worries extended to investments too,” the bank states, adding that 62 per cent said the market is too risky for investing right now; 59 per cent said they didn’t contribute to their investments at all in 2022.

Finally, an in-depth look at consumers’ feelings about their personal finances, including debt, expenses and savings, conducted for the Credit Counselling Society (CCS), asked 1,013 Canadians about their levels of anxiety and pessimism related to their financial situation. “Canadians weren’t particularly optimistic in their responses,” they note.

The 2023 Consumer Debt Report by the CCS found two-in-three carrying non-mortgage debt, 41 per cent needed to draw from savings during the past year and 36 per cent said they’d been forced to use credit instead of cash to manage increasing expenses. They add that 35 per cent also said they cut back on their savings efforts. 10 per cent said they were unable to keep up and were deferring payments.

Of those surveyed, 30 per cent felt pessimistic about their financial situation. “Very few felt fully optimistic heading into 2023,” the society states. “While job instability has been much less of an issue over the past 12 months, spending more on essentials has become an even bigger reason for Canadians’ worsening financial situation, with more than half ranking it as the number one contributing factor.” 

Four out of five said they were spending more on essentials – the top contributor to their worsening financial situation.

All told, they say 33 per cent felt anxious about their financial situation and 21 per cent felt neutral. Those who were somewhat and very confident added up to 46 per cent. Regarding their debt, 68 per cent said they were worried or concerned, 63 per cent said they were anxious, 60 per cent agreed they were frustrated and 43 per cent were depressed. To manage debt, 83 per cent said they’d made lifestyle changes, while 73 per cent said they’d borrowed or made changes to their savings in recent months. Two-thirds said they’ve recently needed to lean on credit or savings. 

“Worrying and stress is impacting people’s mental health, especially if they don’t know help is available,” the society states. “With the cost of essentials increasing the way they have, a significant number of people are running out of options when it comes to making ends meet.”