New research paints a sombre outlook for Canadian household finances as inflation takes a bite out of real wages and rising interest rates mute economic growth.
The Desjardins study released Wednesday said the coming months could be bumpy for household budgets as cracks begin to show in the pandemic recovery.
“By the end of this unusual economic and financial cycle, the massive wealth accumulated by Canadian households will most likely have shrunk, at least in real terms,” the study said. Meanwhile, the phaseout of government aid programs could hurt some household budgets while the savings rate is expected to gradually trend lower as costs rise, the study said.
Higher wages and a return to more normal levels of inflation will help curb loan delinquencies and consumer insolvency, according to the research.
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