A Bank of Montreal (BMO) survey revealed Canadians' concerns about inflation and a potential recession amidst economic uncertainty.
The survey found that 63 percent of respondents are concerned about a potential recession in the next 12 months, with nearly half expecting the economy to weaken in 2025. By contrast, only 19 percent of respondents believe the economy will improve. Inflation remains a significant concern, with 67 percent reporting a negative impact on their financial situation. Canadians feel the financial strain of rising prices, as many report spending significantly more on basic living expenses. Over 40 percent of respondents said they are paying between $100 and $300 extra per month, while nearly 40 percent incur additional costs exceeding $300 monthly.
"While the trade concerns are front and centre for many Canadians and should be taken seriously, global economic growth is expected to continue and we expect underlying Canadian economic growth to improve in 2025, barring serious and sustained tariff action," said Robert Kavcic, senior economist at BMO Capital Markets. He also noted that inflationary pressures appear to be stabilizing near the Bank of Canada's target.
Despite economic concerns, the survey reveals that Canadians are experiencing investment growth. Tax-Free Savings Account (TFSA) values hit record levels, reaching an average of under $45,000, an eight percent increase from last year. Canadians plan to contribute an average of $6,500 to their TFSAs in 2025, slightly less than the $6,600 contributed the previous year. Generational differences remain evident, with baby boomers holding average TFSA balances exceeding $72,000, far surpassing those of younger Canadians.
Many Canadians turn to professional financial advisors for guidance in the face of economic headwinds. The survey revealed a growing reliance on financial advice, with 56 percent of respondents stating that seeking professional advice is more important now than before. Additionally, 89 percent of respondents believe their advisors are helping them achieve their financial goals, a notable increase from the previous year.
Chief investment strategist at BMO Private Investment Counsel Brent Joyce emphasized that while concerns about the broader economy persist, financial markets often perform well in uncertain times. He encouraged investors to distinguish between economic conditions and stock market performance.