More than half of Canadian consumers don’t feel like their wages can keep up with inflation and over a third are saving money in anticipation of a recession, says a report from TransUnion.
The credit reporting agency’s Consumer Pulse Q2 2023 revealed that 55% of consumers felt like their incomes couldn’t withstand the inflation crisis.
Forty-two percent of consumers who were optimistic about their finances last quarter, of whom 53% were Gen Z and 48% were millennials, reported the most confidence.
However, confidence is worsening among millennials, of whom 53% reported optimism about their finances during the second quarter of last year, owing to the toll that worsening economic conditions have taken on younger income earners in the last year.
Fifty-seven percent of consumers reported feeling confident about their finances in the second quarter of this year, but that’s also down from 59% during the same period last year.
Among respondents of all ages, 34% are saving money in preparation for what they believe is an imminent recession.
That’s in spite of records savings during the pandemic—Canadian households had over $90 billion of excess cash in November 2020, and that figure broke $200 billion the following April—much of which has been spent, the TransUnion report said.
Gen Z and millennials, at 50% and 39%, respectively, were the largest cohorts in savings mode, further indicating that the country’s wariest income earners are its youngest.
Thirty-two percent of respondents were incapable of paying their bills in full last quarter, among whom 38% planned to make partial payments. TransUnion’s report said that was consistent with recent research showing that Canadians have been making diminishing credit debt payments.
As a result, the number of Canadian consumers whose debt balances carry over into the next month has been growing, the report added.
