Nearly four in 10 Canadians are now borrowing money to pay for groceries, shelter and other daily expenses, say federal researchers. According to Blacklock's Reporter, one report described it as the worst of times for many Canadians..“In the current economic context many Canadians are facing the biggest financial challenges of their lives,” wrote the Financial Consumer Agency of Canada, a federal regulator that enforces Bank Act regulations. “More are borrowing money to cover their day to day expenses including by using high-cost loans.”.Findings were drawn from monthly questionnaires with 1,000 Canadians nationwide. The Agency first commissioned regular surveys following the 2020 outbreak of the pandemic..“The %age of Canadians who borrowed money to cover daily expenses increased from 26% in 2020 to 38% in September 2022,” said the report. “The proportion of Canadians who used online lenders or payday loans more than tripled from August 2020 to September 2022, from 1.42% to 4.52%.”.“The %age of Canadians who used their savings to cope with the pandemic rose from 33% in 2020 to 48% in June 2022,” wrote researchers. Other findings showed:.• 42% of Canadians surveyed “believed finances control their life”;• 41% have no emergency funds to cover unexpected expenses;• 41% “were worried their money would not last”;• 40% said they are “just getting by financially”;• 38% borrowed money for day-to-day expenses;• 33% “believed they would never have what they want because of their financial situation”;• 31% “said they were short on money at the end of the month”;• 25% spent more than their monthly income..Agency surveys were conducted as the Bank of Canada imposed eight consecutive interest rate hikes that raised borrowing costs by four %age points. However data were compiled before the most recent federal forecasts of an inevitable recession in 2023..“It is not going to feel good,” Bank Governor Tiff Macklem told reporters January 25. “That is basically no growth.”.The Bank in a Monetary Policy Report said inflation and interest rates will remain above pre-pandemic levels into 2024. “Higher unemployment could undermine homebuyer sentiment and lead to a larger than expected drop in house prices,” said the report. “This in turn could reduce household wealth, access to credit and consumer confidence.”.Finance Minister Chrystia Freeland in a Fall Economic Statement last November 3 confirmed a recession was likely. “Times feel tough,” said Freeland. “Our economy is slowing down.”.“We cannot support every single Canadian in the way we did with emergency measures at the height of the pandemic,” said Freeland. “To do so would force the Bank of Canada to raise interest rates even higher. It would make life more expensive for everyone for longer.”
