Canada's Housing Bubble

Consumer confidence in Canada has dropped “significantly,” according to the September issue of the RBC Canadian Consumer Outlook Index, reflecting concerns over the rate of global economic recovery.

The report issued Friday, said consumer confidence in Canada had remained about the same as December 2009, but then fell 14 points from 108 to 94 in the three areas that make up the index: current conditions, expectations and personal investments.

RBC said that while six in 10 Canadians, or about 60%t, feel the overall economic outlook is good, this is down seven points from the last quarter. The report suggests job anxiety, at about 22%, is up two points from the last quarter, but still down from a high of 27% in November 2009.

However, looking ahead to next year, fewer Canadians, 46%, feel the national economy will improve and that’s down nine points from three months ago.

Personal debt management is still top of mind for many consumers, the report says, adding half of Canadians say they are focusing efforts on reducing their debt over the next year and 39% plan on spending less.

“It’s good to see people focused on debt management and reduction,” Andrea Bolger, senior vice-president, personal financing products at RBC said in a release.

“It’s important that Canadians feel confident and understand that managing debt is crucial to their financial success.”

The RBC index found most Canadians, about 78%, don’t do an official debt review on a yearly basis, but a majority, about 60% do keep a close track of their debt standing.

“Regularly reviewing your borrowing needs and credit situation while building your assets ... is key to staying on top of your finances and ensuring your goals are being met,” Ms. Bolger said.

The September index also found that 26% of Canadians think their personal financial situation will improve in the next three months and about 39% think their situation will improve over the next year. That’s down slightly from the previous measure of 42%.

Sixty-six per cent of Canadians think interest rates are going up in the next six months, a decrease from the last quarter (84%). Three-in-ten Canadians (28%) expect that interest rates will stay the same over the same period.

“The uncertain and uneven global economic outlook has not gone unnoticed by consumers, translating to heightened anxiety and weaker confidence,” said Craig Wright, senior vice-president and chief economist, RBC.

“The continued uncertainty and uneven recovery was one of the factors contributing to us downgrading our 2010 forecast, expecting GDP growth of 3.3%, down from 3.6% projected last quarter.”

The RBC index is conducted online by Ipsos Reid. The panel of 4,292 Canadians consists of 642 people in British Columbia, 473 in Alberta, 500 in Saskatchewan/Manitoba, 1,360 in Ontario, 848 in Quebec and 469 Atlantic Canada.