The economy is growing, albeit at a sluggish rate. Inflation is subdued, at just 1.8 per cent in December. Interest rates have fallen from a 2022 peak of five per cent to three per cent. The labour market is relatively strong, adding 91,000 jobs in December, exceeding expectations.
Yet most Canadians hate this economy.
To be sure, “the gloominess of the past few years is subsiding,” said Dan Arnold, chief strategy officer at polling firm Pollara Strategic Insights, which has been measuring consumer sentiment for 30 years.
But Arnold is careful to say that Canadians are “not optimistic, they’re less pessimistic.”
In Pollara’s latest survey of 1,506 people across Canada released last month, 70 per cent of respondents said they believed Canada is in a recession.
RBC Economics reports that growth in average disposable income for the middle class has been a paltry 3.7 per cent over the past three years. That’s lower than inflation in that period.
“The heart of the matter,” said the Canadian Centre for Policy Alternatives (CCPA) in a report last month, “is that households are forced to spend a larger share of their disposable income on essentials compared to a few years ago.”
So, we’re not experiencing a frequently invoked “vibecession.” We’re living in an economy of permanently higher prices. That’s not the vibes, it’s painfully real.
Here are seven things Canadians hate about the economy. The comparison often used below is to 2019, the last pre-pandemic year before “weird pandemic economics” raised the price of almost everything.
Food prices
Food inflation has come down sharply, to 2.2 per cent last year from a 2022 high of 9.8 per cent. But prices remain at the elevated levels to which the high inflation raised them. That includes the price of milk (up 22 per cent since 2019), whole chicken (up 27 per cent), ground beef (up 34 per cent), eggs (up 38 per cent), and infant formula (up 55 per cent). “People don’t just want price stability,” economist Armine Yalnizyan told me. “They want prices to go back down.” The culprits here include continued above-normal transportation and farm-input costs.
Mortgage payments
The average Canadian monthly mortgage payment of $1,984 is 40 per cent higher than just five years ago. Mortgage costs are eating up large amounts of disposable income. Total mortgage debt payments by Canadians jumped almost 54 per cent from the third quarter of 2019 to the third quarter of 2024, to $153.3 billion. Mortgage rates have eased, but at a current lowest rate of 3.9 per cent on a five-year fixed mortgage, they remain higher than the 2.6 per cent average that prevailed in the pre-pandemic years.
Rent
Average rent for a two-bedroom apartment in the GTA has increased by 26 per cent since 2019 to a current $1,972 per month. But that number includes long-term renters. New renters are confronted with asking rents of $3,000 or more per month, a factor of the acute housing shortage.
Utilities payments
Average monthly natural gas bills in southern Ontario have risen by 19 per cent in the past five years, to $78.44, according to the Ontario Energy Board, which regulates energy pricing. And Ontario electric bills now average 12.2 cents per kilowatt hour (kWh), an increase of almost 30 per cent in that time.
Gas prices
Ontario gasoline prices, at a current average of 154 cents per litre, are 33 per cent higher than in 2019.
Car loans
Monthly loan payments on new cars, excluding SUVs and trucks, now average $1,019, more than double 2019’s $486. That’s a factor of the almost 50 per cent increase in new-car prices in five years, to about $66,000, and in used-car prices, up about 44 per cent to an average of $38,000 in that period. And interest rates on car loans, at today’s average of 6.8 per cent, are higher than the 4.4 per cent in the last three pre-pandemic years.
Job insecurity
Pollara’s latest survey of consumer sentiment shows that 23 per cent of respondents — or almost one in four people — say it’s very or somewhat likely that they or someone in their household may lose their job in the next 12 months. The current jobless rate of 6.7 per cent is at an eight-year high.
And there’s another cause of anxiety: uncertainty about the economy’s future.
Interest rates could fall further to spur an economy suffering continued anemic growth. Or borrowing costs could rise if threatened U.S. tariffs bring on a resurgence of inflation.
That’s a quandary for borrowers, says Yalnizyan. “Anything purchased with leverage (car payments, credit card debts) will suffer from this uncertainty of where monthly carrying costs will land.”
Which means, alas, that the long stretch of economic uncertainty since the onset of the pandemic is sure to continue.
