The measure of consumer confidence in credit conditions is also below its historical average. This is because, compared with usual, consumers expect:
- more difficult access to credit
- increased probability of defaulting on debt
- higher interest rates
Confidence regarding labor market conditions and the general economic environment are above average. Consumer confidence in the labor market is high: Canadians feel positive about both their own work situation and the economy as a whole.
Consumers plan to spend significantly more over the next 12 months (Chart 7). Household spending growth will be supported by the extra savings some Canadians accumulated during the pandemic. As in the first quarter of 2022, consumers intend to spend about one-quarter of their extra savings over 2022 and 2023.
However, the quantity of purchases may decline. Canadians expect both spending and prices to increase but anticipate prices will increase by more, which means fewer purchases made per dollar spent. A reduction in the quantity of purchases may be tied in part to weaker-than-normal consumer confidence as people expect that credit conditions will worsen and wage growth will not keep up with inflation.