Confidence Among Canada's Middle Class Falls Before Tax Cut

  • Trudeau cuts would affect earnings from C$44,701 to C$89,401
  • Broad confidence index falls for third week nationally

Prime Minister Justin Trudeau’s plan for an immediate tax cut to bolster the middle class can’t come soon enough for some Canadians, with weekly telephone polling showing confidence among those in mid-income brackets is sliding.

The Bloomberg Nanos Consumer Confidence Index dropped to 56.2 last week, from 56.8 previously, the third straight decline. Sentiment about personal finances weakened, while results were mixed on job security, real estate and the prospects for the economy.

The drop in broad consumer sentiment was sharpest for those earning between C$15,000 ($11,100) and C$59,999 annually, the figures show. Optimism remained relatively unchanged for earnings of C$60,000 or above, and rose for those on less than C$15,000. Trudeau, who led the Liberal Party to an election victory in October, pledged to cut taxes for those earning between C$44,701 and C$89,401 annually, while raising them on those making more than C$200,000.

Expectations Downtrend

With the Bank of Canada predicting fourth-quarter economic growth will slow, “household expectations and consumption could very well continue their downtrends," said Robert Lawrie of Bloomberg Economics.

The provincial picture, meanwhile, is shifting. The energy-rich prairies, with the lowest consumer confidence in the country amid an oil price shock, rebounded to 49.1 last week, from 48.1, while Canada’s confidence leader, British Columbia, slid to 61.8, from 63.2. Quebec slid 2 percentage points.

Confidence in Ontario, Canada’s most populous province, fell to 58.4, from 58.6, and remained unchanged in Atlantic Canada.

The national expectations sub-index, based on questions about the economy and housing prices, fell to 53.3, the lowest since Oct. 9. The pocketbook index, based on personal finances and job security, fell to 59.1, versus a 12-month average of 60.4.

The share of those expecting the economy to become weaker over the next six months reached a nine-week high of 29.8 percent. Those who see it strengthening also rose, though it’s still down from the 2015 high of 29.2 set in mid-November.

The share of those saying their job is secure, meanwhile, fell to 48.4, a nine-week low and down from 50 a week earlier.

The share of those expecting a decline in real estate prices over the next six months rose to 16.7, from 15.2 and the highest level since September.

Nanos Research conducts weekly polling of 250 people based on their economic outlook, personal finances, real estate expectations and job security, creating a four-week rolling average of 1,000 respondents. The latest polling concluded Dec. 4, and the results are considered accurate within 3.1 percentage points, 19 times out of 20.

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