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Canadian economic confidence drops amid uncertainty over economic recovery: RBC Canadian Consumer Outlook Index

Debt management top-of-mind with half of consumers focused on reducing debt

TORONTO, October 1, 2010 — Canadian confidence dropped significantly, reflecting concerns over the pace of the global economic recovery, according to the September RBC Canadian Consumer Outlook Index. After hovering around the same mark since December 2009, the overall Index fell 14 points from 108 to 94, driven by declines in all three sub-indexes that comprise the Consumer Outlook Index: current conditions, expectations, and personal investments.

While six-in-ten Canadians (60 per cent) believe the overall economic outlook is good, this is down seven points from last quarter. Job anxiety, at 22 per cent, is up two points from last quarter but still below its high of 27 per cent in November 2009. Looking ahead to the next year, fewer Canadians (46 per cent) now think that the national economy will improve (down nine points from three months ago).

Debt management continues to weigh on the minds of consumers. Half of Canadians (51 per cent) say they are focusing on reducing their debt over the next year or so, while four-in-ten (39 per cent) say they plan on spending less.

"It's good to see people focused on debt management and reduction," said Andrea Bolger, senior vice-president, Personal Financing Products, RBC. "It's important that Canadians feel confident and understand that managing debt is crucial to their financial success."

While most Canadians (78 per cent) indicated they don't undertake an official credit/debt review on a yearly basis, a majority (60 per cent) say they keep close track of their debt. Forty one per cent of Canadians are confident that they are managing their debt well and 17 per cent say they're just keeping their head above water.

"Regularly reviewing your borrowing needs and credit situation while building your assets with the help of an RBC advisor is key to staying on top of your finances and ensuring your goals are being met," added Bolger.

Other national highlights include:

  • Personal Financial Situation (Overall): The percentage of Canadians who think that their personal financial situation will improve in the next three months remains stable at 26 per cent in September, compared to 27 per cent in June. Looking ahead, 39 per cent of Canadians expect their personal economic situation to improve over the next year, lower than the previous measure (42 per cent).

  • Interest Rates: Sixty-six per cent of Canadians think interest rates are going up in the next six months, a significant decrease from the last quarter (84 per cent). Three-in-ten Canadians (28 per cent) expect that interest rates will stay the same over the same period.

"The uncertain and uneven global economic outlook has not gone unnoticed by consumers, translating to heightened anxiety and weaker confidence," said Craig Wright, senior vice-president and chief economist, RBC. "The continued uncertainty and uneven recovery was one of the factors contributing to us downgrading our 2010 forecast, expecting GDP growth of 3.3 per cent, down from 3.6 per cent projected last quarter."

RBC provides advice and tools to help clients manage their debt including the following credit principles:

  • Choose the credit solution that is right for you by aligning your credit choices with your values and your financial circumstances
  • Set goals and use debt wisely to achieve them
  • Manage your debt effectively by determining how much you can realistically afford and stay within your means
  • Make sure you have a repayment plan - manage your debt; don't let it manage you
  • Understand the true cost of your debt - pay high interest rate debt first.

Whether Canadians want to borrow with confidence, get more from their everyday banking, protect what's important, save and invest or take care of their businesses, the RBC Advice Centre www.rbcadvicecentre.com can help answer their questions. Advice videos are updated regularly to reflect current trends and to answer the questions that are top of mind with Canadians. Interactive tools and calculators provide customized information covering many facets of personal finance. With the guidance of RBC advisors who are available to chat live, Canadians have access to free, no-obligation professional advice about RBC products and services and personalized one-on-one service. In addition, all personal RBC online banking clients have access, at no cost, to myFinance Tracker (www.rbcroyalbank.com/myfinancetracker), RBC's new online financial management tool, and will enable them to create a set budget and track their spending habits.

About The RBC Canadian Consumer Outlook Index
The RBC Canadian Consumer Outlook Index, benchmarked as of November 2009, is conducted online via Ipsos Reid's national I-Say Consumer Panel to 4,292 Canadians (642 British Columbia, 473 Alberta, 500 Saskatchewan/Manitoba, 1,360 Ontario, 848 Quebec, 469 Atlantic Canada). Weighting was then employed to balance demographics and ensure that the sample's composition reflects that of the adult population according to Census data and to provide results intended to approximate the sample universe. Data collection was September 1-9, 2010. A survey with an unweighted probability sample of this size and a 100 per cent response rate would have an estimated margin of error of ±1.5 percentage points, 19 times out of 20, of what the results would have been had the entire population of adults in Canada been polled.

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For more information, please contact:
Suzanne Willers,
RBC Corporate Communications, (416) 974-2727

Gillian McArdle,
RBC Media Relations, (416) 974-5506