No respite for Canadian consumers as COVID-19 drags on

The third quarter of 2020 will be a particularly difficult time, PBO projections say

No respite for Canadian consumers as COVID-19 drags on

Canadians’ purchasing power will continue deteriorating significantly, with the national unemployment rate most likely to settle at the double digits by year-end.

The latest forecast by the federal government’s Parliamentary Budget Officer (PBO) warned that Canada’s unemployment levels are now in the red zone, and will peak during the third quarter of the year.

With the rate at 7.2% as of the end of Q1, unemployment will enter into a steep upward slope. PBO’s projections placed Q2 figures at 14.8%, Q3 at 15%, and Q4 at 12.7%. Overall, these numbers are expected to yield an end-of-2020 rate of 12.4%, real estate information portal Better Dwelling reported.

The impact of the coronavirus pandemic has been particularly apparent in Canadians’ household finances. Unprecedented travel restrictions and social distancing policies have led to work stoppages for millions across North America.

A recent edition of the Bloomberg Nanos Canadian Confidence Index has found that 22.3% of the nation’s employed professionals are afraid that they might lose their jobs. This was the highest share since 2013, and accompanied another record high (36.9%) in the share of Canadians who said that their personal finances have worsened over the past year.

Seventy-nine percent said that they are expecting the economy to be in much worse shape within the next six months. This considerably outstripped the previous record (57%) last seen during the 2008-09 recession.