We’ll know the new Liberal government is succeeding in its mission to build up the Canadian economy when anxiety about the cost of living eases in a meaningful way.
Right now, living costs are the top source of financial stress. There is a widespread feeling of falling behind in this country, and addressing it should top the new government’s economic agenda.
Close to 80 per cent of 6,179 adults surveyed in February by the Financial Resilience Institute said increases in the cost of living have outpaced income growth in their household. That’s down from 84 per cent last June, so anxiety is at least easing a little. But the feeling of falling behind is still far too prevalent.
Inflationary increases for groceries and expensive housings and rent explain a lot of the unhappiness about living costs. The inflation rate has declined to normal levels and home prices are weakening in some of the most expensive markets in the country. Unhappiness about living costs persists because of the cumulative effect of past inflation, and a sense that incomes aren’t increasing enough.
This is where the new government has a chance to make a difference. Building the economy by encouraging business investment would jolt the job market in a way that encourages income growth through raises, bonuses and opportunities for promotions or moving to better jobs.
We’ll know the government had made progress on the economy when the level of concern about falling behind the cost of living drops well below current levels.
Affordability matters as a political issue. The Conservatives performed as well as they did in the recent election, especially in Ontario, because they acknowledged the financial pain people are feeling and talked about turning things around. If the Liberals can’t deliver on affordability, Canadians know who to turn to.
A few other signs of stress that came up in the latest survey by the non-profit Financial Resilience Institute:
- 23 per cent of households said their financial situation had improved in the past year, down from 24 per cent last June
- 55 per cent said they had drawn on savings to pay expenses, compared to 58 per cent in June
- 53 per cent said housing affordability is a problem, down from 55 per cent in June
From our readers
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Tools and guides
A helpful primer on getting started as a DIY investor, including risks and advantages.
Do you have a mortgage question?
Whether you're a aspiring or new home buyer, or looking to renew, we want to hear from you. Is a fixed or variable rate the best way to go? How will tariffs impact the mortgage market? Is better to go to your bank or consult a mortgage broker? Submit your question and our mortgage expert could answer it in an upcoming column.
