SaltWire's Ask a Journalist: You have questions, let's find some ...
The latest weather columns and browse beautiful photos from Cindy Day
SaltWire's cartoonists bring heart and humour to the news.
NOW Atlantic: Smart thinking for a changing world
The latest on Nova Scotia's mass shooting
What you need to know about COVID-19: June 2
Visit SaltWire.com for more of the stories you want.
By Laurie Campbell and Kelley Keehn
A report by The Organization for Economic Co-operation and Development (OECD) suggests global economic growth is slowing – and Canada is no exception to the rule. The report indicates “the Canadian economy was resilient in 2018, but troubling signs lay ahead” as it’s showing signs of a sharp decline in growth in 2019.
While the OECD analysts (and similar studies) look at indicators like order backlogs, business inventories and business confidence surveys, it seemed instructive to add consumer context to multiple reports on slowing economic growth by asking Canadians about a series of consumer issues. The premise is that economic issues eventually distill down to kitchen table issues that confront people on a daily basis, such as bill payments and debt, the cost of living, job security and bankruptcy.
A new study, called the Kitchen Table Forecast, found that four-in-five Atlantic Canadians (80 per cent) are entering 2019 worried about their financial fortunes. That leads the country in terms of economic pessimism when it comes to their personal financial fortunes. The Leger poll of 1,515 Canadians (including 105 Atlantic residents) was conducted for non-profit organizations Financial Planning Standards Council (FPSC) and Credit Canada.
Atlantic residents are, like all Canadians, feeling stressed about their finances and are often at a loss to improve their situation. This hopelessness can cause people to do nothing, and possibly make their condition worse. Uncertainty about an ever-changing job market and economy only intensifies the average person’s confidence and ability to handle the ebb and flow that life inevitably presents.
The ‘R word’ – Will the economy get worse in 2019?
The report didn’t ask about the dreaded “R-word” (recession) specifically; however, three-in-10 of all Atlantic Canadians (29 per cent ) feel that the economy will get worse – below the national average of 42 per cent. Meanwhile 47 per cent believe it will stay the same and 14 per cent of Atlantic Canadians feel the economy will improve, leading the country in economic optimism when it comes to the overall state of the economy. Looking across the country, people aged 55-plus are significantly more likely than those under 55 to feel the economy will get worse in 2019 (47 per cent vs 39 per cent ).
It’s no surprise people over 55 are more pessimistic (or realistic) when it comes to the Canadian economy. This isn’t their first rodeo and they know the red flags. Insolvency rates were up by more than five per cent last fall, the country has seen five interest rate hikes since mid-2017, and the cost of living continues to rise. If debt levels don’t come down and people don’t start to get serious about paying off their debt, it’s only a matter of time before generational trouble may ensue. You can only bury your head in the sand for so long.
Looking ahead – daily financial concerns
The issues that are keeping people up at night include the increased cost of living, keeping up with monthly payments and debt and mortgage rate increases. More than one-in-five are concerned with either losing their job or other bread winners in the home losing their job.
In the end, while the report paints a depiction that is a little frosty, it’s not all pessimism. On the positive side of the ledger, one-in-five Atlantic Canadians are “not worried about anything” going into 2019.
How to recession proof your life
There are plenty of steps that can be taken to ensure financial security, no matter where a person sits on the spectrum of debt or savings. Here are some basic ways to escape the cycle of financial letdowns:
Build (and stick to) a monthly budget that cuts costs in easy areas such as cell phone and internet plans and gym memberships.
Contribute regularly to an emergency savings fund.
Pay down debt. Start with paying off the credit cards with the highest interest rates first, also known as the “avalanche” method for paying down debt.
Consider your insurance needs during times of high debt in the case of death, disability or job loss.
First and foremost, don’t panic. Canadians frequently seek out expert assistance from a number of sources. For example, a Certified Financial Planner® professional can create a plan that protects a family’s downside. People in debt often find relief through a not-for-profit credit counselling agency that are confidential, non-judgmental and offer free expertise on things such as personal debt consolidation.
It’s never too late to get started. Through education, sound management and by using the financial tools that are readily available, Canadians can weather the 2019 economic storm.
Laurie Campbell is CEO of Credit Canada, and Kelley Keehn is an author, educator and Consumer Advocate for Financial Planning Standards Council.