Canadian Survey of Consumer Expectations—Overview

Introduction

The Bank of Canada launched a quarterly survey in the fourth quarter of 2014 to measure expectations of Canadian consumers. The goal was to fill the gap in data on consumers’ expectations in Canada.1 This note accompanies the publication of the quarterly survey results and explains the data presented.

Data collection

The Canadian Survey of Consumer Expectations is a nationally representative, internet-based quarterly survey of a rotating panel of approximately 2,000 heads of households.2 It is administered by a large polling firm on behalf of the Bank of Canada. Respondents participate in the panel for up to a year, with a roughly equal number joining and leaving the panel each quarter. This reduces variability caused by changes in composition, allowing for greater stability and precision in the estimates. The survey’s target population is adult residents of Canada aged 18 or older. The survey is conducted in February, May, August and November and is offered in both English and French. Respondents answer questions about inflation, the labour market and household finances and demographic questions about themselves and their household.  

Central tendencies

Many respondents use rounding when providing numerical answers to survey questions. Over time, this can result in either no change or suddenly large changes in the median response (Armantier et al. 2017). The statistical measure called interpolated median accounts for the shares of responses above and below the median in the direction of the heavier weight and can better represent the centre of the skewed data with a limited number of responses.3 We use interpolated median to represent the central tendencies in consumers’ expectations about key economic variables.4

Inflation expectations and perceptions

Data collected in this survey allow the Bank to monitor changes in households’ expectations of inflation. On our website, inflation expectations are presented for different horizons: one-year-ahead, two-year-ahead and five-year-ahead expectations. The survey also elicits respondents’ perceptions about current inflation (inflation over the past 12 months). Following are the questions from the survey questionnaire related to inflation.

Charts 1 and 2

Perceptions about current inflation are based on the following questions:

Over the last 12 months, do you think that there has been inflation or deflation? (Note: deflation is the opposite of inflation.)

Please choose one.

  • Inflation
  • Deflation (the opposite of inflation)

What do you think the rate of [inflation/deflation] was over the last 12 months? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the last 12 months, the rate of [inflation/deflation] was ___ percent.


One-year-ahead inflation expectations are based on the following questions:

Over the next 12 months, do you think that there will be inflation or deflation? (Note: deflation is the opposite of inflation.)

Please choose one.

  • Inflation
  • Deflation (the opposite of inflation)

What do you expect the rate of [inflation/deflation] to be over the next 12 months? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the next 12 months, I expect the rate of [inflation/deflation] to be ___ percent.


Two-year-ahead inflation expectations are based on the following questions:5

Now we would like you to think about inflation further into the future. Over the 12-month period between [t + 12 and t + 24], do you think that there will be inflation or deflation?

Please choose one.

  • Inflation
  • Deflation (the opposite of inflation)

What do you expect the rate of [inflation/deflation] to be over that period? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the 12-month period between [t + 12 and t + 24], I expect the rate of [inflation/deflation] to be ___ percent.


Five-year-ahead inflation expectations are based on the following questions:

Looking further into the future, say five years from now, do you think there will be inflation or deflation? (Note: deflation is the opposite of inflation.)

Please choose one.

  • Inflation
  • Deflation (the opposite of inflation)

What do you expect the rate of [inflation/deflation] to be five years from now? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Five years from now, I expect the rate of [inflation/deflation] to be ___ percent.

Labour market expectations

The Canadian Survey of Consumer Expectations provides information on respondents’ expectations about wage growth and labour turnover.

Chart 3

Perceptions of wage growth over the past 12 months are based on the following questions:

Over the last 12 months, do you think that your earnings on your [use “job” if one job and “main job” if more than one job] have increased or decreased, before taxes and deductions?

Please choose one.

Over the last 12 months, my earnings have…

  • increased by 0 percent or more
  • decreased by 0 percent or more

By about what percent do you think your earnings have [increased/decreased] on your job (or main job), before taxes and deductions? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the last 12 months, the rate of [increase/decrease] in my earnings was ___ percent.


Expectations about wage growth 12 months from now are based on the following questions:

Please think ahead to 12 months from now. Suppose that you are working in the exact same job (or main job) at the same place you currently work and working the exact same number of hours. What do you expect to have happened to your earnings on this job, before taxes and deductions?

Please choose one.

Twelve months from now, I expect my earnings to have…

  • increased by 0 percent or more
  • decreased by 0 percent or more

By about what percent do you expect your earnings to have [increased/decreased]? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Twelve months from now, I expect my earnings to have [increased/decreased] by ___ percent.

Chart 4

Probability of losing a job is based on the following question:

What do you think is the percent chance that you will lose your [main/current] job during the next 12 months?

Please enter your response in the box below, where 0 percent means “Absolutely no chance” and 100 percent means “Absolutely certain.”


Probability of leaving a job voluntarily is based on the following question:

What do you think is the percent chance that you will leave your [main/current] job voluntarily during the next 12 months?

Please enter your response in the box below, where 0 percent means “Absolutely no chance” and 100 percent means “Absolutely certain.”


Probability of finding a job in the next three months if respondent were to lose main/current job is based on the following question:

Suppose you were to lose your job (or main job) this month. What do you think is the percent chance that within the following three months, you will find a job that you will accept, considering the pay and type of work?

Please enter your response in the box below, where 0 percent means “Absolutely no chance” and 100 percent means “Absolutely certain.”

Household finance, credit and house prices

The Canadian Survey of Consumer Expectations provides insights on the financial situation of households by asking about expectations for income and spending growth, interest rates and house price growth. These questions are aimed at better understanding issues related to the financial stability of Canadian households.

Chart 5

Expectations for income growth in the next 12 months are based on the following questions:

Next, we would like to ask you about your overall household income going forward. By household we mean everyone who usually lives in your primary residence (including yourself), excluding roommates and renters.

Over the next 12 months, what do you expect will happen to the total income of all members of your household (including you), from all sources, before taxes and deductions?

Please choose one.

Over the next 12 months, I expect my total household income to…

  • increase by 0 percent or more
  • decrease by 0 percent or more

By about what percent do you expect your total household income to [increase/decrease]? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Twelve months from now, I expect my total household income to have [increased/decreased] by ___ percent.


Expectations for spending growth in the next 12 months are based on the following questions:

Now think about your total household spending, including groceries, clothing, personal care, housing (such as rent, mortgage payments, utilities, maintenance, home improvements), transportation, recreation and entertainment, education, and any large items (such as home appliances, electronics, furniture or car payments).

Over the next 12 months, what do you expect will happen to the total spending of all members of your household (including you)?

Please choose one.

Over the next 12 months, I expect my total household spending to…

  • increase by 0 percent or more
  • decrease by 0 percent or more

By about what percent do you expect your total household spending to [increase/decrease]? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the next 12 months, I expect my total household spending to [increase/decrease] by ___ percent.

Chart 6

Interest rate expectations are based on the following questions:

At what level do you think that interest rates on things such as mortgages, bank loans and savings will be in…

Please enter a number.

One year from now, interest rates will most likely be ___ percent.

Two years from now, interest rates will most likely be ___ percent.

Five years from now, interest rates will most likely be ___ percent.

Chart 7

Expectations about growth in local house prices are based on the following questions:

Over the next 12 months, what do you expect will happen to the average home price in your area? Please choose one.

Over the next 12 months, I expect the average home price to…

  • increase by 0 percent or more
  • decrease by 0 percent or more

By about what percent do you expect the average home price in your area to [increase/decrease]? Please give your best guess.

Please enter a number greater than 0 or equal to 0.

Over the next 12 months, I expect the average home price to [increase/decrease] by ___ percent.

Special questions

The Canadian Survey of Consumer Expectations also allows the Bank of Canada to better understand current developments in the Canadian economy in a timely manner by introducing special questions. For example, Kostyshyna and Luu (2019) provide information about the incidence of informal work in Canada, which was gathered through the inclusion of special questions in several surveys.

References

Armantier, O., G. Topa, W. van der Klaauw  and B. Zafar. 2017. “An Overview of the Survey of Consumer Expectations.” Economic Policy Review 23 (2): 51–72. Federal Reserve Bank of New York.

Cox, N. 2009. “IQUANTILE: Stata Module to Calculate Interpolated Quantiles.” Boston College Department of Economics. Available at https://econpapers.repec.org/software/bocbocode/s456992.htm.

Gosselin, M.-A. and M. Khan. 2015. “A Survey of Consumer Expectations for Canada.” Bank of Canada Review (Autumn): 14–23.

Kostyshyna, O. and C. Luu. 2019. “The Size and Characteristics of Informal (‘Gig’) Work in Canada.” Bank of Canada Staff Analytical Note No. 2019-06.

  1. 1. Gosselin and Khan (2015) introduce the Canadian Survey of Consumer Expectations and provide the first summary of the results.[]
  2. 2. Before the second quarter of 2018, the survey was based on 1,000 respondents.[]
  3. 3. Armantier et al. (2017) provide a brief summary in Appendix B.[]
  4. 4. In Stata, the interpolated median is calculated using the iquantile module (Cox 2009).[]
  5. 5. In the survey, month and year are used instead of t + 12 and t + 24 in this set of questions. For example, if the survey took place in August 2019, this question would read as follows: “Over the 12-month period between August 2020 and August 2021, do you think there will be inflation or deflation?”[]