Consumer confidence in both Canada and the United States experienced significant declines in February, raising concerns over economic stability. The Conference Board of Canada's Index of Consumer Confidence reported a steep drop of more than 12 points, landing at 52.6. This represents the largest one-month decline in over a year and a half. Concurrently, the U.S. consumer confidence index fell by seven points to 98.3, marking the most substantial decrease in over four years. The declines highlight growing apprehensions about persistent inflation and the potential impacts of tariffs.
The Canadian index serves as a broad gauge of economic sentiment, revealing that 62.6% of Canadians feel it is a bad time for major purchases. Despite this pessimism, sentiment around buying big-ticket items has slightly improved compared to last year. Additionally, the survey revealed that pessimism about job opportunities reached its worst level in over four years, with 33.9% of Canadians stating their personal finances are deteriorating, a rise of 2.7 percentage points from the previous month.
Historically, the confidence index hovered around 120 points in the early 2000s but suffered during the global financial crisis and the COVID-19 pandemic. In recent years, it has struggled to surpass 80 points. The latest findings arrive amidst tentative signs of inflation stabilization and decreasing interest rates, yet consumer sentiment remains bleak.
The Conference Board has warned that potential tariffs could plunge the Canadian economy into recession and exacerbate the cost of living crisis. U.S. President Donald Trump imposed a one-month pause on broad tariffs against Canada in early February, which may have influenced the survey results conducted thereafter. However, the survey does not specify factors contributing to the waning confidence.
"Whether or not this threat hangs over us for a long time is, I think, the big question for the economy in 2025." – Renner
Renner further elaborated on how tariffs could impact Canadian industries.
"Say you're a factory worker in Ontario. If they put tariffs on the border, that could really hurt the industry," – Renner
In his view, these are the areas where consumers are feeling the most pressure from economic uncertainties.
"I think that's where the consumers are really feeling it." – Renner
The implications of these trends are profound. Should tariffs be enacted, they could lead to significant disruptions in trade and industry, affecting job security and consumer spending power.
