Canadian Survey of Consumer Expectations—Third Quarter of 2025

Results of the third-quarter 2025 survey | Vol. 6.3 | October 20, 2025

The Canadian Survey of Consumer Expectations was conducted through an online panel from July 31 to August 21, 2025. The survey took place before the Canadian government announced it would remove some counter-tariffs. Follow-up phone interviews took place from August 22 to 28, 2025.

Overview

• Tariffs and trade tensions continue to affect consumers’ spending plans and perceptions about their financial health. Many survey respondents expressed a desire to prioritize spending on Canadian goods and vacations in Canada.
• Consumers saw a further deterioration in the labour market in the third quarter, driven in part by a sharp drop in job-finding prospects for public sector workers.
• Consumers continue to think tariffs will generate inflationary pressures. Expectations for short-term inflation remain above their pre-pandemic averages, and expectations for longer-term inflation have picked up again. A large share of survey respondents cited tariffs as the most important factor affecting the Bank of Canada’s ability to control inflation.
• Overall, the CSCE indicator—a measure that summarizes Canadian consumers’ opinions about their spending plans, the labour market and their personal finances—rose modestly in the third quarter from its most recent low. Slight improvements in financial health and household spending intentions contributed to this rise, while perceived labour market conditions remained negative.

The trade conflict continues to weigh on consumer finances and spending intentions

The CSCE indicator rose slightly in the third quarter (Chart 1).1 Consumers’ perceptions of their financial health have improved, and their spending intentions are somewhat less negative. Despite the slight recovery, the indicator remains below levels observed prior to the trade conflict with the United States and well below its historical average.

Overall, Canadians became less pessimistic about their financial health in the third quarter (Chart 2). More consumers than last quarter believe their financial situation has improved since the third quarter of 2024 (Chart 2, blue bars) and that they are less likely to miss a debt payment (Chart 2, orange bars). However, consumers still feel that tariffs and trade uncertainty are weighing on their financial health. As a result, the CSCE financial health index remains low compared with levels observed before the trade conflict. The breadth of pessimism also shows up in the financial health index, where all components are weaker than their historical average.

Consumers’ perceptions of their financial situation vary according to their views on the impacts of the trade conflict. Most consumers think the worst effects on the economy from trade tensions are still to come, and those consumers feel the least financially secure (Chart 3).

Consumer spending intentions also rose slightly. This increase is driven mostly by consumers who feel their financial situation is the same or better than in the third quarter of 2024 (Chart 4). One respondent noted that factors like lower gas prices are also helping: “Yes, gas has come down. So that’s why our spending is up.”

The improvement in spending intentions is concentrated among consumers who have accumulated more wealth, such as homeowners and older people. Spending expectations declined, however, for other groups that tend to hold less wealth, such as younger people and those whose highest level of education is high school.

Though improving overall, spending intentions remain weak. Intentions to spend on discretionary items—such as durables (e.g., furniture, appliances), restaurant meals and vacations—remain low and mostly unchanged from last quarter. About half of consumers still perceive barriers to spending. Chart 5 shows the most frequently cited factors weighing on spending are:

• high prices of many goods and services
• economic uncertainty
• elevated housing costs

Compared with before the trade conflict began in early 2025, the share of consumers reporting that economic uncertainty is significantly dampening their spending expectations has grown noticeably (Chart 5). One respondent said, “Tariffs themselves have created an impact, but the uncertainty has also created an impact.” 

The trade conflict also continues to affect consumers’ spending behaviour. As they did last quarter, consumers continued to prioritize purchases of goods made in Canada and vacations within Canada. At the same time, they plan to spend less on goods made in the United States and vacations there (Chart 6). However, price differences between domestic and foreign-made goods remain a key deciding factor for many. Three-quarters of survey respondents indicated they are not willing to pay more than an additional 10% for a made-in-Canada product. For example, one respondent said, “I’m going more out of my way now to buy Canadian. I would say I am willing to pay more these days for products made in Canada. Not a substantial amount more. I’d say 5%–10% more at the most.”

The trade conflict is also shaping consumers’ views on the economy in general. About two-thirds of consumers—a much larger share than before the trade conflict began—now expect the Canadian economy to fall into a recession over the next 12 months. One consumer said, “I think we’re honestly in a recession, or going to be in a really bad recession pretty soon. I don’t see it getting any better for quite some time.”

Consumers see further deterioration in the labour market

Unlike the financial health and consumer spending indexes, which improved somewhat from last quarter, the labour market index fell (Chart 7). In the third quarter of 2025, consumers reported a lower chance of voluntarily leaving a job or finding a job. This decline does not appear to be linked to the trade conflict.

In particular, those working in the public sector at the time of the survey reported a lower probability of finding a job, possibly due in part to the federal government’s comprehensive expenditure review (Chart 8). In a follow-up interview, one said, “The government’s priority is to rein back spending, and that’s having a direct impact on staffing. It’s frustrating because I want to stay in the public sector and do something for Canadians, but the opportunities are shrinking.”

Consumers’ reported chance of losing their job declined slightly this quarter but remains higher than before trade tensions started in early 2025. This elevated concern is concentrated among workers in sectors that are highly dependent on trade between Canada and the United States. These workers identified the following as top factors influencing their reported risk of losing their job:

• the outlook for the economy
• business conditions in their sector

In follow-up interviews, one person said, “I am concerned about the impact of tariffs and trade tensions on the labour market because if we have large-scale layoffs in our steel and auto industries, then it’ll have a cascading effect on the rest of the economy.”

Many consumers continue to expect tariffs to generate inflationary pressures

Consumers’ expectations for short-term inflation are little changed in the third quarter of 2025 and still above their pre-pandemic averages (Chart 9, yellow and green lines). Expectations for inflation five years from now moved up again this quarter but remain near their pre‑pandemic average (Chart 9, red line).

In follow-up interviews, some respondents mentioned that tariffs could cause prices in Canada to increase considerably. One person said, “Tariffs are causing a lot of things in Canada in general to just be more expensive than they [otherwise] would be.”

In particular, consumers’ views on tariffs are leading them to anticipate significant increases in motor vehicle prices over the next 12 months. Inflation expectations for vehicles, which rose significantly last quarter, remain as high as they were after the COVID-19 pandemic led to supply chain issues. “Vehicles for sale right now were bought [by car dealers] before tariffs came in place. Once the pre-tariff stock of vehicles is gone, then we will see a really big impact on vehicle prices,” one survey respondent said.

A slightly larger share of respondents this quarter than last reported that they view tariffs as the most important factor hindering the Bank’s ability to control inflation (Chart 10). In addition, about 70% of consumers think the most serious effects of trade tensions on inflation have yet to materialize.

Endnotes

The Canadian Survey of Consumer Expectations gathers respondents’ views on inflation, the labour market and household finances. Additional information on the survey and its content is available on the Bank of Canada website. The survey report summarizes opinions expressed by the respondents and does not necessarily reflect the views of the Bank of Canada.