Results of the second-quarter survey | Vol. 6.2 | July 21, 2025
The Canadian Survey of Consumer Expectations was conducted through an online panel from April 24 to May 15, 2025. Follow-up phone interviews took place from May 20 to 26, 2025.
Overview
- This Canadian Survey of Consumer Expectations (CSCE) report introduces the CSCE indicator—a measure developed to summarize the opinions of Canadian consumers about their spending plans, the labour market and their personal finances. The CSCE indicator declined this quarter as spending intentions weakened further due to the persistent threats of tariffs and related uncertainty.
- Consumers continued to see the labour market as soft. Fears of job loss remain elevated but have declined slightly since last quarter.
- The trade conflict is leading consumers to become increasingly cautious about their spending plans and to change their spending behaviour. Many respondents expressed a desire to prioritize spending on Canadian goods and vacations in Canada.
- Consumers’ short-term inflation expectations have changed little since increasing markedly in the first quarter of 2025. While consumers expect large increases in motor vehicle prices over the next 12 months, their inflation expectations for essential goods and services declined this quarter. More consumers cited tariffs as the most important factor affecting the Bank of Canada’s ability to control inflation.
The trade conflict continues to weigh on consumers
The CSCE indicator summarizes the opinions of Canadian consumers about their spending plans, the labour market and their personal finances (Box 1).1 This measure fell for the second consecutive quarter as the impact of tariffs and related uncertainty continued (Chart 1).2 Since the start of 2025, the decline in the indicator has been driven mainly by weaker spending intentions (Chart 1, green bars) and growing pessimism among Canadians about their financial health (Chart 1, yellow bars). This is particularly true for respondents in regions heavily dependent on trade with the United States.
Chart 1: The CSCE indicator declined further because of weakening spending intentions
The labour market index remained nearly unchanged after falling sharply in the first quarter of 2025 (Chart 2). Consumers, especially young people, continued to report a higher-than-average chance of losing their job. This elevated concern is largely because of the trade conflict with the United States. In follow-up interviews, an employee of a manufacturing company said, “Tariffs are impacting my job a little bit. They are affecting my industry a lot, and many companies are laying off their employees.”
Chart 2: Consumers continue to see the labour market as weak
Although still elevated, concerns about job security have eased marginally since last quarter. This is particularly the case for workers in sectors that are highly dependent on trade between Canada and the United States (Chart 3).
Chart 3: Job security concerns have diminished the most among workers in sectors that rely on trade with the United States
Against this backdrop of ongoing trade uncertainty, about two-thirds of consumers continue to expect the Canadian economy to fall into a recession over the next 12 months. In follow-up interviews, many consumers expressed the view that the trade conflict and the associated uncertainty are harming the economy. One person said, “Hard to predict what will happen with the tariff situation in the future, but I think with the way things are going to be, it seems like it won't get better until it gets really bad.”
Consumers are increasingly cautious about their spending plans
This quarter, consumers showed greater caution in their spending decisions. The consumer spending index fell for the second consecutive quarter, with more consumers planning to cut spending in response to their inflation expectations (Chart 4). These expectations are being driven by consumers’ belief that tariffs will put upward pressure on inflation. Survey results show that consumers plan to reduce their spending, mainly because of:
- economic uncertainty
- elevated housing costs
- high prices of many goods and services
Chart 4: Spending intentions weakened mainly because consumers believe tariffs are inflationary
Additionally, this quarter consumers anticipate their spending will increase more slowly than prices. This is particularly the case among workers who expect their job to be negatively affected by the trade conflict (Chart 5). Consumers’ plans for spending on discretionary items—such as durables (e.g., furniture, appliances), restaurant meals and vacations—remained subdued. In follow-up interviews, one person said, “I am more conscious, focusing on the essentials. Because now, with everything that’s still uncertain, you still have to have some contingencies and hold off on bigger purchases or spending.”
Chart 5: Spending intentions are particularly weak for consumers concerned about their job security
The trade conflict continues to affect consumers’ spending behaviour. For instance, more than half of consumers reported that they plan to reduce their spending on US goods and vacations in the United States (Chart 6). In contrast, about 60% of consumers plan to increase their spending on domestic goods, and about one-third plan to spend more on vacations in Canada because of the trade conflict. In follow-up interviews, one person said, “I booked a vacation for the summer here, and then I booked a vacation in the fall internationally, but I won't be going to the US anytime soon. I don’t feel good about spending my money there, which is unfortunate because I have friends in the US, and I like the US generally.”
Chart 6: Consumers are prioritizing Canadian-made goods and choosing to vacation in Canada rather than the United States
Although consumers want to prioritize spending on Canadian-made goods, price differences between domestic and foreign-made goods remain a key deciding factor for many consumers. Most consumers reported they would be willing to pay up to a maximum of 10% more for goods made in Canada than for similar goods made in the United States. In follow-up interviews, one person said, “We have all these various pressures now in our communities to Buy Canadian, but ultimately, I'm going to do what works for my wallet. So, whether that's a Canadian brand, whether that's an American brand, I buy what works for my budget.”
Consumers continue to expect the trade conflict to generate inflationary pressures
Consumers’ expectations for short-term inflation are still above their pre-pandemic averages after having risen significantly last quarter (Chart 7, yellow and green lines). Similarly, expectations for inflation five years from now have also moved up since the start of the trade conflict; they remain around their pre‑pandemic average (Chart 7, red line).
Chart 7: Consumers’ expectations for short-term inflation have changed little since increasing notably last quarter
In follow-up interviews, some respondents mentioned that tariffs would put significant upward pressure on prices in Canada. One person said, “With tariffs being brought about, it makes me think that things may not be better in the short term. So, I can imagine that we're still on this path of higher inflation.” Another said, “Tariffs are going to increase the price of goods in Canada, with the biggest impact on vehicles.”
Consumers’ views on tariffs are leading them to expect significant increases in motor vehicle prices over the next 12 months. Inflation expectations for vehicles are as high now as they were after the COVID-19 pandemic caused supply chain issues (Chart 8, blue line). In contrast, inflation expectations for essential goods and services—such as food, gasoline and rent—declined this quarter (Chart 8, yellow, green and red lines).
Chart 8: Inflation expectations for motor vehicles increased significantly this quarter
Significantly more consumers this quarter than last reported that they view tariffs as the most important factor hindering the Bank’s ability to control inflation (Chart 9). As well, most consumers continue to expect that tariffs will affect inflation for less than five years. This is a shorter duration than the impact of other key factors consumers identified as affecting inflation, such as domestic government spending and housing costs.
Chart 9: Consumers point to tariffs as the main impediment to the Bank of Canada's ability to control inflation
Box 1: Introducing the CSCE indicator
The Canadian Survey of Consumer Expectations (CSCE) indicator was developed to summarize the opinions of Canadian consumers about their spending plans, the labour market and their personal finances and to track how consumers’ opinions change over time.3
The indicator combines the results from 11 questions in the CSCE. These questions were selected because of their relevance to consumers’ everyday lives, their ability to capture consumers’ feelings about the economy, and the availability of a long time series.
The responses to these questions are aggregated into three indexes:
- The labour market index measures how consumers perceive their own future job security and their potential labour market prospects.
- The financial health index measures how consumers perceive their current financial situation and how they expect it to evolve in the future.
- The consumer spending index measures consumers’ spending intentions.
Within each index, the components that make up the index are standardized and equally weighted (Table 1-A). Then the three indexes are averaged to produce the CSCE indicator. A positive value suggests consumers’ opinions are positive compared with the survey average, while a negative value indicates their opinions are negative compared with the survey average.
| Index | Components |
|---|---|
| Labour market |
|
| Financial health |
|
| Consumer spending |
|
The CSCE indicator and its indexes can be a useful tool for policy-makers and forecasters because they not only provide a summary measure of consumer opinions but also explain the reasons for variation in consumer opinions, including across different demographic groups.
Endnotes
- 1. The CSCE indicator summarizes three indexes: the labour market index, the financial health index and the consumer spending index. The first two were presented in the first-quarter report. Components of the consumer spending index, although not aggregated in an index, have also been used in previous CSCE reports.[←]
- 2. See Box 1 in the Business Outlook Survey—Second Quarter of 2025 for more on the impact of uncertainty on firms and consumers.[←]
- 3. For more details, see J. Dolinar, P. Sabourin and M. West, “Synthesizing Signals from the Canadian Survey of Consumer Expectations,” Bank of Canada Staff Discussion Paper No. 2025‑11 (July 2025).[←]