A new RBC Consumer Outlook Index study indicates Canadians are feeling less optimistic about the economy as they struggle to build up their savings and worry about job prospects.Getty Images/iStockphoto
Canadians have managed to pay down debt in the economic downturn, but the majority feel they aren't getting ahead financially, according to a bank study that will be released on Thursday.
The RBC Consumer Outlook Index, which tracks quarterly economic trends through a survey of consumers across the country, suggests confidence about a recovery in the Canadian economy has dropped. Even as the economic situation in the United States begins to show encouraging signs of improvement, the mood in Canada remains decidedly pessimistic.
Less than one-third of those surveyed, about 32 per cent, feel positive about the near-term outlook for the Canadian economy, the study says. A year ago that number stood at 43 per cent.
The drop is even more dramatic when compared to January, 2010, when the same index indicated 56 per cent of those surveyed felt positive about the economy
"Canadians are more uncertain and less confident about the economy, and about the prospects that they have in the near-term," David McKay, head of Canadian Banking at RBC, said in an interview.
The sour mood comes as Canadians are paying down debt, but struggling to save. The survey indicates the average amount of non-mortgage personal debt being carried by Canadians is $11,729 per person, which is down about 10 per cent from $13,020. Non-mortgage debt includes money borrowed on credit lines and credit cards.
"We've certainly seen behaviour changes among Canadians around their attitudes towards debt and their activity towards managing debt," Mr. McKay said. "The first area we saw it manifest itself in was greater pay downs of credit card debt. ... Canadians are placing a greater emphasis in paying down higher cost credit card debt."
However, difficulty trying to save money and earn interest in an era of historically low rates is weighing heavily upon Canadians' financial optimism.
About 57 per cent of those surveyed said they don't have any savings set aside for an emergency, such as a job loss or other financial shock. About 46 per cent of those surveyed described their financial situation as "standing still."
"We always council our customers to build a six-month cushion for the unexpected. I think Canadians are struggling to do that right now," Mr. McKay said.
Mortgage tastes are also changing, as consumers take advantage of low interest rates over a longer period of time.
"We're seeing heavy preponderance of longer-term fixed-rate mortgages in our portfolio right now," Mr. McKay said.
Meanwhile, concerns over employment have also gone up slightly in the past year. Of those surveyed, 21 per cent said they are worried about their job, compared to 20 per cent a year ago.
"We're becoming more concerned about employment prospects in Canada," RBC chief economist Craig Wright said. "The past two years have started out with strong employment numbers and then finished on a weak note. Unfortunately, we've now seen 2011's year-end weakness spill over into the beginning of this year."
The Consumer Outlook Index surveyed 4,479 Canadians online in early January, including 490 in British Colombia, 498 in Alberta, 538 in Saskatchewan and Manitoba, 1,395 in Ontario, 921 in Quebec and 635 in Atlantic Canada. The index is benchmarked as of November, 2009.
Grant Robertson