OTTAWA - Global economic turmoil and negative reports at home are taking their toll on the faith of ordinary Canadians and Americans in the economy.
Canadians are most gloomy about near-term job prospects and the health of their finances, according to the Conference Board's latest consumer confidence survey, released Tuesday.
The consumer confidence reading for the month shows a fall of 6.8 points to 74, about where it stood in January.
It was much the same story south of the border where the Conference Board's U.S. index dropped for the fourth month in a row to 62 points, also the lowest level since the start of the year.
Economists often don't put a lot of stock in consumer confidence surveys, but Jennifer Lee, a senior economist with the Bank of Montreal, said there is reason to take these results to heart.
Canadians and Americans have been bombarded with daily reminders of the intractable nature of the European crisis and reports that businesses are holding back on investment and hiring, Lee said. In this backdrop, it is natural to assume households may also be reluctant to go out on a limb on purchasing decisions, which would further hurt the economy.
"I think there is reason for pessimism given that there is so much uncertainty out there," she said. "We're still expecting relatively strong growth in emerging markets, but we've just downgraded our outlook for Europe."
The Ottawa-based Conference Board's survey finds the responses on job prospects were among the weakest since early 2009, when the economy was in the depths of the worst recession in decades.
About twice as many (28.1 per cent) thought the job market would get worse in the next six months as those (13.9 per cent) who believed it would get better — an 8.4-point deterioration on the issue.
"The overall balance of opinion on this question has now been negative for the past 12 months, further evidence that consumer spending in Canada is likely to slow over the coming months," the think-tank said.
As well, only 17.4 per cent said their financial situation had improved in the past six months, while 20.4 per cent said it had worsened — a deterioration of 3.6 points.
In Canada, Bank of Canada governor Mark Carney has suggested he will lower his outlook for growth in the upcoming monetary policy review in July in light of the economy's disappointing 1.9 per cent expansion in the first quarter and the continuing slowdown. Statistics Canada will issue the result for gross domestic product performance for April on Friday.
In a paper issued Tuesday, Capital Economics said it expects the global slowdown will further depress commodity prices and take the loonie to about 92 cents US by the end of the year — about five cents lower than the current level — and to as low as 86 cents US by the end of 2013.
"There are a host of downside risks to the Canadian dollar, including further falls in commodity prices and the diminishing prospect that the Bank of Canada will raise interest rates any time soon," said David Madani, Canadian chief economist with the global economic forecasting group.
"What’s more, if Canadian oil prices decline much further, it is difficult to see how this would not upset the domestic economy, putting even more downward pressure on the Canadian dollar."
Somewhat surprisingly, attitudes toward making major purchases remained largely unchanged in June, but actual behaviour belies the answers on this question.
Statistics Canada reported last week that retail sales had fallen 0.5 per cent in April, and were down 0.8 per cent in volume terms for the third decline in four months. As well, home purchase growth had slowed notably, with the exception of a few hot spots such as the Toronto condo market.
On a regional basis, confidence fell most sharply in Atlantic Canada and Ontario.
The declines in confidence in those regions were sharp, with Ontario's index falling 10.3 points to 59.4, with only 9.2 per cent of respondents saying they expected job growth in six months. The Atlantic Canada index fell 14.7 points to 60, as jobs expectations also fell precipitously.
Confidence was also down in the Prairie provinces, but not as much, and fell only marginally in British Columbia and in Quebec.
Fewer workers, more retirees
In 1970, Canada old-age dependency ratio was around 13, meaning that every 100 people of working age had to support about 13 retirees. That ratio grew to more than 19 by 2008, and every 100 workers has to support nearly 20 retirees. This trend is expected to continue in the coming decades.
Senior citizens are fastest-growing demographic
According to Health Canada, the growth of the over-65 crowd will account for nearly half of Canada's population growth between now and 2041. As the baby boomers age, the population of seniors is projected to hit 6.7 million in 2021, before seeing a massive spike in the following two decades, bringing the senior population to 9.2 million by 2041.
Canada's median age expected nearly to double
In 1971, the median age in Canada was 26.6, meaning half the population was above that age, and half below. By 2010, the median age had grown to 39.7. And according to Statistics Canada's projections, that number could grow to as high as 46 by 2061. That would make Canada's population heavily weighted towards the elderly.
Length of time males spend in retirement more than triples
In the 1960s, the average retirement age for a male was 64.5 years, while life expectancy hovered around 70 years. That meant the average Canadian male spent about half a decade in retirement, collecting benefits from the government. But since that time, life expectancy has grown -- and the retirement age has come down. Men now retire on average at 61, and their life expectancy is 78. That means the average male now spends 17 years in retirement. For women, the increase in retirement time is even more pronounced, but because of the large influx of women into the workforce over the past 50 years, women are spending more time in the workforce than they used to.
By 2051, women 85-plus will be largest demographic group
According to this chart from David Foot, author of <i>Boom, Bust and Echo</i>, Women aged 85 or over will form the single largest demographic group in Canada by 2051. By this point, Canada's traditional "population pyramid" -- with young people making up the largest group, and each aging group making up a successively smaller portion of the population -- will have evened out, with roughly equal proportions of the population in each group. This chart shows that nearly one quarter of the population will be over 65 by 2051, placing an enormous burden on younger, working-age people.