17 July 2009

Canada, U.S. tread different paths

The following article is excerpted from the 17 July 2009 edition of the “Toronto Star”.

It is a tale of two countries. Two surveys, released yesterday, offer strikingly different assessments of the consumer psyche in Canada and the United States.Amid suggestions the economic crisis has reached a turning point, Canadian consumer confidence is "resilient." That stands in sharp contrast to U.S. consumer sentiment, which continues to sour as jittery Americans cast doubt on the prospects of a speedy recovery.

The TNS Canadian Facts consumer confidence index suggests it is "holding steady" for the third month in a row.

Its July reading was 93.4, slightly better than the 92 scored in June. In fact, July's result suggests that Canadian consumer confidence could be edging back up to the 94.1 level achieved in May.

At that time, both stock and bond markets were expressing gusto about a quicker-than-expected economic rebound. Some of that enthusiasm was later tempered, but benchmark stock indexes gained fresh traction this week.

Michael Antecol, vice-president of TNS Canadian Facts, said Canadians appear to be shrugging off recent media reports suggesting the recovery could be slow – particularly for the job market. The national unemployment rate hit 8.6 per cent in June, its highest level in 11 years. About 7,400 jobs were lost last month versus 42,000 in May. Economists, however, suggest it could take two years for the labour market to recover, particularly in Ontario.

Lingering uncertainty may have left Canadians in a holding pattern when it comes to big-ticket spending.

"They still have one foot on the clutch and the other on the gas. They're holding steady, toggling between the pedals, not moving forward but not rolling backwards either," Antecol said.

U.S. consumer sentiment, meanwhile, is heading south, according to a separate report. The RBC Cash index points to a "marked downward shift" for July. The index reflects consumer attitudes and spending by household. It stood at 22.4 for July, an 11.9-point decline from June's 34.3 reading….