Record number of Canadians sour on state of economy as financial woes spread: poll


Many of the highest income earners say they’re hurting

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More Canadians have soured on the state of the economy as pressure builds from a growing set of financial challenges, according to the latest reading from an ongoing poll tracking household sentiment.

The poll accompanying the Maru Household Outlook Index (MHOI) for September found that 70 per cent of people believe the economy is on the wrong track, the highest reading since that question was first asked in February 2021. Maru Public Opinion, the company that runs the poll and index, said that financial distress was a common theme on the way to reaching that milestone level.

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The latest MHOI currently sits at 84 down two points from the last reading and the second-worst measure since April 2021 when it slumped to 83 in March 2021. The base number for the index is 100. A result above 100 indicates optimism and below, pessimism. Maru compiles its household index each month by asking a panel of about 1,500 people a series of questions about the economy’s prospects over the next 60 days.

“So, the question is: Will the Bank of Canada take all of that into consideration and hold interest rates as they are until the new year knowing the potential consequences of even more collateral damage if they hike rates further; or do they keep it up with the tough medicine approach and keep raising rates and/or keep it up until they hit their inflation target likely putting the country into a recession?” John Wright, executive vice-president of Maru Public Opinion, said.

In an attempt to cool inflation, the Bank of Canada has now increased its benchmark overnight lending rate 10 times since March 2022, to a 21-year high of five per cent. The central bank will announce its next rate decision on Oct. 25.

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Maru found evidence of financial distress throughout the latest version of its poll with several other factors contributing to the drop in the index, besides the reading on the economy.

For example, 30 per cent of Canadians said they were worse off in September than they were the month before, an increase of five percentage points. A majority — 53 per cent, up four percentage points — indicated they are worried about their personal and day-to-day finances.

“Those acutely affected with worry (23 per cent) is at an all time high,” Maru said.

More people (37 per cent, up two percentage points) said they struggled to make ends meet with 15 per cent describing the struggle as “acute.”

While not major factors in the index result, the poll found other trends contributed to the negative sentiment.

For example, one in four respondents indicated that they might not be able to keep a roof over their family’s head over the next two months. That finding was up six percentage points from the last poll and was “the highest level recorded since July 2020.”

A rising number — 18 per cent, up one percentage point — also said they would “likely default on making payments on major loans or a mortgage” over the next two months. Meanwhile, a similar number of people said they would likely need to move to a smaller home to save money.

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The report also uncovered a surprise result.

“What’s evident now in the data is that many of those highest income earners ($100,000-plus) are hurting too,” the poll said. Previously, most of the financial distress was recorded in younger groups with less income.

Maru found that one quarter of those in the $100,000-plus income bracket reported being worse off and were struggling to make ends meet. Twenty-one per cent said they may not be able to keep a roof over their head in the next 60 days, and 14 per cent revealed they may default on a loan or mortgage.

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Data for the Maru index and poll was collected from 1,530 Canadian adults Sept. 29 to Oct. 1.

For comparison purposes, a probability sample of this size has an estimated margin of error of +/- 2.5 per cent, 19 times out of 20.

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