Consumer confidence levels down in December

Why? Rising economic uncertainty, cost of carrying debt, fuel pessimism

Farmers Forum staff

OTTAWA — Canadian consumer confidence levels plummeted in the final month of 2024. The Conference Board of Canada’s index of consumer confidence recorded the steepest monthly decline of the year in December. It followed a smaller dip in November, which ended several months of improved consumer confidence amid declining interest rates.

The index measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. The Conference Board of Canada — an Ottawa-based think-tank — conducts a random survey of 2,000 households each month to gauge that optimism or lack of it.

Respondents are asked to compare their current financial situation with a year ago and what they expect in the next six months; their views on job opportunities; and their attitudes about making significant purchases like homes or cars in the near term.

The benchmark index score is 100, based on 2002. December 2024 scored 60, down 10 points from a month earlier.

December’s weakness was broad-based, according to the Conference Board, with deterioration seen in responses to all survey questions asked.

• The proportion of Canadian households thinking their current financial situation is better than a year ago decreased 1.7 percentage points to 11.7 % in December. At the same time, the share of those believing that their current finances have worsened compared to last year rose 3.9 percentage points to 33.9 %.

• The share of Canadians anticipating their finances to improve over the next six months decreased 0.3 percentage points to 16.2 %. Meanwhile, the percentage of respondents expecting their financial situation to worsen rose 2.7 percentage points to 26.4 %.
• Despite falling inflation, rising economic uncertainty and cost of carrying debt are fueling consumer pessimism.

• Compared to November, the proportion of respondents expecting more jobs over the next six months fell to 5.9 %, the lowest share since 2009, reflecting a decline of 1.8 percentage points compared to November. The pessimism is likely related to a rising unemployment rate as interest rates cooled off economic growth. (Statistics Canada reported a 7.6 % Ontario unemployment rate for November, the highest since May 2014 — not including the pandemic.)

• Respondents also remained hesitant to make a major purchase, as the share who felt now was a good time fell 1.4 percentage points to 14.4 %. A downward trajectory in interest rates combined with an uncertain global environment and a weak economic performance are likely to blame.