What is the possibility of a 1990s-style recession in Canada?
Most Canadians think that a recession is imminent and it could last for at least a year, according to a survey by Manulife Financial Corp.
In the Manulife Bank of Canada Debt Survey released Wednesday, it found the majority of respondents (87 per cent) think Canada will soon enter a recession, or that it’s already in one. It also found more than half of individuals believe a recession will last at least a year.
Over the past few months, many economists have warned about the growing risk of a recession.
Scotiabank Economics’ Chief Economist Jean-François Perrault said he expects the economy will enter a technical recession in the first half of 2023, while Royal Bank of Canada economists say it could be as early as the first quarter of next year.
The report also found almost all of those surveyed (94 per cent) are worried about inflation and interest rates (85 per cent).
“As the economic landscape is looking rocky, a large majority of Canadians are getting worried and that’s particularly telling when reviewing this season’s Manulife Bank’s Debt Survey results,” said Lysa Fitzgerald, vice president of sales at Manulife Bank, in the press release.
Many Canadians are concerned about being able to afford their mortgage amid rising rates, the survey found.
The report said most homeowners are worried about their mortgage payments (67 per cent) and are bothered by how much they owe (71 per cent).
Eighty-one per cent of those surveyed say Canada still has a housing affordability crisis on its hands.
The Canadian Real Estate Association (CREA) has reported home prices fell for an eighth-straight month in October.
In a report released last week, CREA said home prices slid 1.2 per cent to an average $756,200 in October, which was the smallest monthly decline since May.
Amid ongoing high housing costs, 64 per cent of Canadians want to buy a home but they can’t afford to, the survey found.
Many residents are also concerned about how rising rates will impact their housing situation in the future, the survey found.
One out of four (25 per cent) mortgage holders said “if rates rise much further, they will be forced to sell their homes when their mortgage renews.”
In a panel on Tuesday, Bank of Canada Senior Deputy Governor Carolyn Rogers said recent homebuyers with variable-rate mortgages will have a hard time adjusting to higher interest rates.
Since March, the Canadian central bank has raised its key interest rate six times in a row.
The last Bank of Canada interest rate decision for the year will be on Dec. 7.
Now in its twelfth year, the Manulife Bank of Canada poll surveyed 2,002 Canadians in all provinces between ages 20 and 69 with household income of more than $40,000. The survey was conducted online by Ipsos between October 7 and 12, 2022. National results were weighted by gender, age, region, and education. This survey has a credibility interval of +/- 2.5 per cent 19 times out of 20, of what the results would have been had all Canadian adults between the ages of 20 and 69 been surveyed.