81 per cent of Canadians concerned about recession occurring in the next three months: BMO Real Financial Progress Index
- 81 per cent of Canadians are concerned a recession is on the horizon this year and three quarters (75 per cent) report that their concerns about inflation have increased in the last three months
- Nearly 8 in 10 adults are making lifestyle changes due to recession concerns
This quarter’s BMO Real Financial Progress Index results found that Canadians are growing increasingly concerned about a recession, inflation, and rising consumer costs. 81 per cent of Canadians said they are concerned about a recession occurring by the end of the year, and over the past three months three quarters (75 per cent) said their concerns about inflation have increased. More than 75 per cent of Canadians feel their financial momentum is threatened by higher grocery bills (81 per cent) and rising cost of gas (76 per cent).
Concerns vary significantly by generation. Older Canadians report feeling more concerned than younger generations. Between ages 45-64, 79 per cent said their concerns about inflation have increased over the last three months compared to 66 per cent of those between aged 18-24 and 73 per cent of those aged 25-34.
In response to the rising cost of living, 77 per cent of Canadians said they are making lifestyle changes such as delaying large purchases (34 per cent), paying down debt (30 per cent), and cutting back on holiday spending (27 per cent).
“As the cost of living and everyday essentials rise and a possible impending recession on the way, it’s understandable that Canadians’ concerns are also increasing,” said Gayle Ramsay, Head, Everyday Banking, Segments & Customer Growth, Personal Banking, BMO. “It’s important, now more than ever, to look at your finances, develop a budget and actively manage your cashflow to avoid unplanned expenses. A BMO financial advisor can help customers put a plan in place that suits their unique needs to navigate uncertain economic times and continue to make real financial progress.”
Compared to this time last year, significantly fewer Canadian adults are confident that they are making financial progress (down four points to 34 per cent). The drop in confidence since this time last year is particularly sharp in Vancouver where confidence dropped 10 points to only 14 per cent, saying they feel confident about their financial situation. In Toronto, confidence has dropped 5 points to 37 per cent and Montreal remains the same at 43 per cent. However, nearly three-in-four Canadians (72 per cent) think they have enough savings for an emergency, an improvement compared to both last quarter (67 per cent) and last year (68 per cent).
“Fears of a recession could become self-fulfilling, so Canadian households need to be prepared, especially if interest rates continue to rise to tame inflation,” added Sal Guatieri, Senior Economist, BMO.
Best practices to help Canadians manage through inflationary periods and economic downturns
Most Canadians understand the importance of having a budget, however, there is room for improvement as the Index revealed 25 per cent of Canadians do not track their financial progress. The number is highest among those aged 45-54, at 31 per cent.
BMO offers the following tips to help Canadians continue to make financial progress:
- Utilize digital banking tools and apps to help track spending patterns: About half of Canadians (48 per cent) said mobile banking tools have helped them make financial progress. BMO’s mobile banking app features digital capabilities focused on helping our customers make real financial progress, including Savings Goals, Pre-authorized Payment Manager, BMO Insights, and BMO CashTrack.
- Talk to a financial advisor who can help you review and adjust your budget to account for rising costs and help save for an emergency. An expert can help ensure your savings and spending goals are still on track or develop a savings and retirement plan.
- Postpone big-ticket purchases, such as appliances or cars. Some price increases may be temporary, in which case it may be worthwhile to wait.
- Review monthly payments, such insurance bills and monthly subscriptions to ensure you are getting the most for your money.
These findings are from the latest BMO Real Financial Progress Index, a quarterly survey conducted by BMO and Ipsos that measures Canadians’ sentiment around financial confidence. The survey was conducted from July 27 to August 29, 2022.
To find out how BMO can help customers make financial progress, visit: www.bmo.com/personal
About the BMO Real Financial Progress Index
Online research was conducted in both US and Canada from July 27 to August 29, 2022. A sample of n=3,402 adults ages 18+ in the US (including n=300 oversamples in Chicago, Indianapolis, and Milwaukee), and a sample of n=3,404 adults ages 18+ in Canada (including n=300 oversamples in Montreal and Vancouver, and n=302 in Toronto) were collected.