In follow-up interviews, many consumers expressed concern about economy-wide challenges resulting from the trade conflict. One person said, “I think the impact of tariffs on the Canadian economy is going to be bad. I think there’s going to be job losses and major inflation, possibly a huge recession.” However, some interviewees said they hope that movements to diversify Canada’s economy and the Buy Canadian sentiment resulting from the trade conflict could lead to long-term benefits for the country.
Survey results also show that this quarter more consumers had negative views about access to credit, and many expect little change in interest rates over the next 12 months. This contrasts with results from last quarter, when consumers anticipated further interest rate cuts. The share of mortgage holders planning to reduce spending to manage higher payments when their mortgage renews increased slightly, after several quarters of decline.
Increased uncertainty and growing consumer cautiousness weigh on spending decisions
Last quarter, consumers reported stronger spending plans. This quarter, however, consumers showed signs of cautiousness about their spending decisions in the context of growing pessimism about their job security and financial health. For example, for the first time since the first half of 2024, there was an increase in the share of consumers who said they are reducing or planning to reduce their overall spending in light of their expectations for inflation and interest rates (Chart 4). This is in line with consumers expecting higher inflation than they did last quarter and no further interest rate cuts. Similarly, consumers no longer expect their spending to increase faster than prices do. In follow-up interviews, one person said, “I’m definitely spending less and saving more because the future is so uncertain. I like to be ahead of what might happen in the economy—for example, my job security might get worse.”
