24 November 2008

Consumer confidence falls again: Conference Board [of Canada]

This article is excerpted from the 24 November 2008 edition of “globeandmail.com”.

Consumer confidence among Canadians has dropped to levels not seen since the last two recessions in the early 1980s and '90s, the Conference Board of Canada said Monday.

The Ottawa-based economic think-tank said its consumer confidence index fell again this month, losing 2.9 points to 71….

Conference Board economist Paul Darby said consumer sentiment “has fallen to depths previously reached only in 1982 and 1990, which were both periods of recession in Canada.”

“The ongoing troubles in equity markets undoubtedly had a negative effect on consumers' views of their family financial situations and future job prospects in their communities.”

The Canadian economy has effectively stood still for much of this year, producing little or no growth as falling commodity prices and the U.S. economic slump have taken a toll on the energy and minerals sectors in Western Canada and manufacturing industries in Ontario and Quebec.

As well, a restructuring of the North American auto sector has led to thousands of layoffs and plant closures in southern Ontario in assembly and parts industries, further eroding consumer sentiment in the country's industrial heartland.

In recent months, however, a sharp drop in oil prices — from $147 (U.S.) a barrel to under $50 — has forced many oil sands producers to scale back planned expansions in northern Alberta, taking billions of dollars out of the oil economy as oil and gas drilling also declines.

Some experts predict that Alberta will slow down to minimal growth next year and won't recover until energy prices rise again.

Overall, most economists predict produced virtually no growth for Canada in 2009, though they expect recovery in 2010, with expectations the jobless rate will surpass seven per cent or go even higher by next year.

The rate for October was 6.2 per cent….

In his report, Darby found one area of optimism: 25.9 per cent of those polled said now is a good time to make a major purchase, up slightly from October, …

The Conference Board poll claims a 95 per cent likelihood of being accurate within 2.2 percentage points.