According to the Conference Board in Canada’s most recent survey, the Index of Consumer Confidence fell 6.5% in December. For December, the index was at its lowest level since May 2009. There has been a steady decline since 2011, with the current survey signaling a drop in retail sales in the near future. The index measures the link between consumer confidence and spending.

For 2011, consumer confidence appeared to decline from “heightened civil unrest in the Middle East and North Africa caused oil prices to spike by 33% which in turn caused gasoline prices to jump from an average of $1.14/litre in January to $1.32/litre in May… significant increase in uncertainty about the potential impact of the European sovereign debt crisis on world financial markets….[and] The third and most troubling factor for Canadian consumers appears to be increased concern regarding their financial situation stemming in part from the fact that the average ratio of household debt to income in Canada has increased to a record 153.0%.,” according to Reed Construction Data. These three factors helped ruin consumer confidence. However, due to increased employment and low interest rates, spending picked up over 2011.

The future for Canada’s economy looks better as fears are lessened regarding the European sovereign debt situation coupled with stronger growth in United States.

Source: Reed Construction Data