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Economic Viewpoint

Is Higher Consumer Spending Growth in Canada Still within Reach

March 7, 2019
François Dupuis, Vice-President and Chief Economist • Mathieu D’Anjou, Deputy Chief Economist • Benoit P. Durocher, Senior Economist

Canadian household consumption spending has slowed significantly in the last few months. This is partly explained by the decline in furniture sales, dragged down by the housing market’s pullback, and slower growth in automobile sales after several years of strong growth. Gradually climbing interest rates are another important factor, while the savings rate is very low from a historical standpoint, which reduces the financial flexibility in households. Thankfully, some bright spots remain. Moreover, strong job creation is giving a boost to households’ disposable income. Under these conditions, consumer spending should continue to grow in the next few quarters, but at a moderate pace.