Canadians' confidence in the economy has been deeply shaken in the wake of the U.S. credit downgrade and the stock market ups and downs that followed, two surveys released on Thursday show.
"You can only take so much bad news about the economy before you start believing it yourself," Norman Baillie-David, Vice President of TNS Canada, said in a statement announcing the company's latest consumer confidence data. "Despite these being the dog days of summer, economic news has been negative lately, and this eventually shows up in how people tend to feel about future prospects, and especially how they feel about making big purchases."
The TNS index of consumer confidence in Canada dropped two points -- to 97.6 -- since the July survey, reflecting growing fear among Canadians that the economic instability that has buffeted Europe and the United States in recent months will spill over into Canada.
TNS' "expectations index" dropped to its lowest point since the summer of 2009, suggesting Canadians are steeling themselves for hard times ahead.
"Between slow job prospects, high gas prices, and the US debt crisis (and its potential impact on the world economy) people are no longer sure of themselves, and big ticket buying is being put on hold," Baillie-David said.
Boston Consulting Group's latest Canadian Consumer Economy Pulse Check showed similar results. Some 42 per cent of those surveyed said they are planning to reduce spending as a result of the crisis in stock markets.
"Canadian consumers are already burdened by high debt levels and feelings of financial insecurity. Last week's volatility in the stock markets only exacerbated the situation," BCG partner Cliff Grevler said in a press release.
BCG's survey found that 33 per cent of Canadians consider themselves financially insecure or in financial trouble. Those numbers are highest in Atlantic Canada (43 per cent) and Quebec (37 per cent).
The survey also found that women are more worried about the state of the economy than men, with 38 per cent of women declaring themselves financially insecure, compared to 29 per cent of men.
That could have a direct impact on Canada's economy, because "women control over 70 per cent of household spending in Canada," Grevler said.
"For the first time in a long time, the uncertainty in the markets is causing Canadians to feel their future prospects will be turning towards the worse," TNS Canada's Daillie-David said. "Unfortunately when it comes to consumer confidence, the fear is that pessimism often turns out to be a self-fulfilling prophecy."