Number of Canadians fretting over personal finances hits new high

More than 40% struggle to make ends meet: poll

The number of Canadians worrying about their day-today finances spiked to a new high in January, according to the latest reading from an ongoing survey of financial well-being.

Fifty-five per cent of people surveyed by Maru Public Opinion for its household outlook survey reported that they are worried about their personal and daily finances, an increase from 52 per cent in December and the highest reading since the survey started tracking this measure in July 2020.

There were other notable signs of financial distress.

More people indicated they were struggling to make ends meet — 41 per cent in January up from 38 per cent the month before. Further, one-third of survey participants said they were relying on government benefits “to keep their head above water,” an increase of four percentage points from the previous survey.

“People are relating back to where they were when interest rates were low and they had savings in the bank,” said John Wright, executive vice-president of Maru Public Opinion. “That’s all gone away.”

Now, interest rates are at a two-decade-plus high of five per cent. Canadians are taking on more debt, Wright said, citing data from credit score agency Equifax, which found that overall consumer debt totalled $2.4 trillion in the third quarter of 2023, an $80.9-billion increase from the same time last year.

That has left consumers in a “mostly pessimistic” mood, a frame of mind reflected in the Maru Household Outlook Index.

For January, the index registered 86 with anything below 100 reflecting negative sentiment and anything above indicating optimism. The Household Outlook Index has been stuck in the doldrums since December 2021 and is just slightly off its most pessimistic reading of 83, recorded in March 2023.

“This month’s index is like an elevator stalled and hanging by a thread over a deep, dark shaft,” Wright said in the press release. The index would be in “freefall” if not for a bit of positive momentum recorded in a few categories that feed into the index, among them the expectation by more people that their local economy will improve over the next 60 days.

While that measure rose slightly, 67 per cent of Canadians continue to feel that the economy is on the wrong track, unchanged from the previous survey. Further, 61 per cent do not think the national economy will improve over the next two months.

The mood portrayed in the survey represents an about-face from the December when people appeared to more optimistic.

Some were hanging that optimism on expectations that the Bank of Canada would soon announce interest rates cuts. But at its most recent meeting on Jan. 24, the bank held rates at their current level, with governor Tiff Macklem indicating more recently that officials are in no rush to start cutting rates.

SOME PEOPLE ARE DOING OK. THE AVERAGE CANADIAN IS NOT.

Despite the pessimistic outlook, the news isn’t all bad, Wright said. GDP for the final quarter of 2023 is likely to come in stronger than expected, possibly allowing for a soft economic landing rather than a recession. The International Monetary Fund is calling for Canada’s economy to grow at the third-fastest pace among its advanced peers. And the jobs market is hanging on, as wages continue to rise.

Still, Maru’s Wright thinks “there is this huge disconnect between bankers, economists and those people who manage money” and ground level Canadians.

Wright said January can be a crucial month, but starting the year off on the right foot is made tougher because deductions for the Canada Pension Plan and employment insurance restart for some.

“Some people are doing OK. The average Canadian is not,” Wright said.