(Bloomberg) -- Household spending per person in Canada is falling at a pace only previously seen during recessions. After adjusting for inflation, the measure fell 1.3% in the second quarter from the year before.
Since the 1960s, spending has declined faster just four times, bottoming out in 1982, 1991, 2009 and 2020. Those years were all marked by deep economic downturns.
Spending has trended downward for two years, helping explain why Canadians are pessimistic about the economy — despite decent top-line growth and easing inflation.
Spending has retreated to 2017 levels.
The economic pie is growing but the slices are shrinking — Canada’s population has grown at one of the fastest rates in the world, adding 2.3 million people in two years. The country’s population breached 41 million earlier this year.
There’s also evidence Canadians are holding off on purchases to save up for a rainy day. Households saved 7.2% of their disposable income in the second quarter, the most since 1996 outside the pandemic.
Friday’s data confirm households are increasingly pinched by high borrowing costs and a tougher job market, major reasons why the Bank of Canada is expected to lower interest rates for a third consecutive meeting next week.
--With assistance from Erik Hertzberg.
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