- Originally from our sister publication, Advisor.ca.
Blame it on an era of stagnant real wages: the majority of Canadians say they have no savings set aside “for a rainy day,” according to the October RBC Canadian Consumer Outlook Index.
What’s worse, 30% said they are dipping into their existing savings to pay for everyday expenses or an emergency, suggesting continued erosion in nationwide savings.
The good news might be that saving has taken a backseat to deleveraging, with one third of survey respondents saying they planned to reduce their debt over the coming 12 months. Another 30% said they planned to rein in spending.
One in five (21%) were optimistic enough to say they would save or invest more in the coming year, while an equal number said they would do it all: pay down debt, spend less and save more.
The percentage of Canadians who expect their personal financial situation will improve over the next year fell 7 percentage points, to 32%. But at least job anxiety held steady, with 22% worried that someone in their household may lose their job.
Fifty-four percent of families said they are delaying major purchases such as a car, household appliances or vacation due to economic conditions. Don’t expect the purse strings to loosen in 2012, either, as 47% said they will spend less on such purchases in the upcoming year.
With such professions of new-found thrift, it should come as no surprising that optimism for the national economy is waning. Just 26% said they expected improvement over the next year, down from 42% in the previous quarter’s survey.
Sadly, the bank’s economics department backs Canadian up. The latest RBC Economic Outlook projects growth will fall by 0.8 percentage points in 2011, to 2.4%.
The overall RBC CCO Index declined 24 points since last quarter, to a reading of 70. The baseline reading of 100 was established in November 2009.
“The drop in the…index reflects ongoing global economic uncertainty, showing that strong Canadian economic fundamentals insulate us but do not make us immune to the turmoil around the globe,” says Craig Wright, senior vice-president and chief economist, RBC. “Given the uncertainty, the drop in the index was not unexpected, though it was disappointing.”