Confidence in Canada’s economy is rapidly deteriorating, with both consumers and businesses pulling back spending amid growing fears of a looming recession, the Bank of Canada reported Monday.
Blacklock's Reporter says the findings, drawn from its quarterly surveys, reveal deepening unease driven by trade tensions and economic uncertainty.
“Consumers showed signs of cautiousness about their spending decisions in the context of growing pessimism about their job security and financial health,” analysts wrote in the Survey of Consumer Expectations: First Quarter.
Concerns were especially pronounced among workers in trade-dependent industries, who expressed heightened anxiety about potential layoffs.
In response to the question, “What do you think is the chance you will lose your job?” 21% of respondents said it was probable. Analysts noted that concerns about job security have intensified since the previous quarter, particularly due to ongoing trade disputes between Canada and the United States.
When asked about the outlook for the national economy over the next year, 30% of consumers predicted a “significant decline.”
A separate report, Business Outlook Survey: First Quarter, echoed the pessimism. “Business sentiment has deteriorated and uncertainty is widespread due to the trade conflict with the United States,” the report stated.
The survey found that 32% of firms are now planning under the assumption that a recession is likely within the next 12 months — more than double the 15% recorded in previous quarters.
“Uncertainty surrounding financial, economic and political conditions remains the top concern for firms and rose sharply this quarter,” the report said.
In response, many businesses are holding off on key decisions, including those involving hiring and spending.
“Hiring intentions are weak,” analysts observed. Firms also reported that they no longer expect input costs to ease, and two-thirds indicated that potential tariffs would raise costs, leading many to increase their prices.
The bank’s next rate decision is set for April 16.
At the previous announcement on March 12, Governor Tiff Macklem expressed concern over the economic risks posed by U.S. tariffs. “That is going to have an impact on our economy,” he told reporters.
When asked if a recession is imminent, Macklem said, “It is going to depend a lot on what the United States does,” adding, “The economic impact could be severe. The uncertainty alone is already causing harm. Monetary policy cannot offset the impacts of a trade war.”
