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81 per cent of Canadians concerned about recession occurring in the next three months: Report

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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).

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.

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