Market Insights

With the Canadian consumer playing a pivotal role in the country’s economy, and much of the underlying business and investment performance, The Scotiabank Women Initiative™ (SWI) for Global Banking and Markets hosted an insight-packed panel at Scotiabank’s Fixed Income Forum in Toronto this Fall.

Entitled ‘The Health of the Canadian Consumer’, a quartet of top women executives from the retail, commercial real estate and financial sectors shared their observations on today’s inflation- and interest rate-weary consumers, and revealed their economic estimates for the coming year, with ‘higher, longer’ rates and inflation likely to persist.

How are consumers right now?

Stating that, “The health of the Canadian consumer is probably the most important question investors need to answer right now,” event moderator Meny Grauman, Managing Director and Canadian Financial Services Analyst at Scotiabank, turned to the assembled panel of “expert doctors to assess the ‘patient’s’ health.”

Pointing out the importance of real data that tracks consumer behaviour, versus broad-brush news headlines, Leslie Buist, Senior Vice President, Finance, at Primaris REIT, referred to trending numbers from her company, one of the largest owner-operators of enclosed shopping malls and retail properties in Canada: “Among the 95% of our tenants who report their monthly sales to us, their 2023 sales are now consistently above pandemic levels. People are still shopping, since everyone needs stuff, and our retail partners are positive about the future and where consumers will be spending.”

With the belief that “cash is king,” Clara Peñuela, Scotiabank’s Senior Vice President and Head, Retail Credit Risk, Global Risk Management, described how the Bank has a good grasp of consumer health, by observing customer spending, payment behaviours by debit or credit, and shifts in their savings, investments and payroll deposits. “We see for example that mortgage holders are holding up pretty well, despite the headwinds, and their resiliency is driven by a number of factors. In particular, many customers improved their financial situation during the pandemic. They were prudent in their spending and managed to bring down some debt levels. That means the consumer was in a much better situation when higher interest rates arrived. While continued consumer resiliency will depend on employment market health, and the direction of inflation, we’ve seen most consumers make prudent choices.”

“From our perspective as a provider of various debt products, the canary in the coal mine is really debt ratios,” observed Penelope Graham, Director of Content at, Canada’s largest digital mortgage originator. “Credit card balances show us how consumers are handling the costs of day-to-day living, whereas mortgage activity on our site indicates whether they can purchase real estate in the coming years, and whether they can service that debt. Year-over-year, borrowers are now qualifying for smaller mortgages, and there’s a steady uptake in fixed rates and longer terms. They are keen to lock into something, to shield themselves from today’s volatility, but they want flexibility so they can make a change in the coming years if rates improve.”

How will consumer sentiment evolve?

Naturally, with a new year just around the corner, and even sooner, the much-anticipated holiday shopping season, forum attendees were eager to hear panelist views on evolving consumer health and whether a recession remains in the cards.

The frank, consensus answer was largely, “Let’s wait and see,” as panelists watch for Bank of Canada monetary policy decisions, movements in inflation and rates, and consumer activity in the coming weeks.

“Ability to service debt is a key risk for the Canadian consumer, especially those mortgage balances,” remarked Penelope Graham of “The onslaught of mortgage renewals coming up – with 65% of mortgage-holders needing to renew over the next three years – means there is going to be a large number of households who will face increased financial pressure at the same time, and there’s going to be an impact that will echo through the economy.”

Scotiabank’s Clara Peñuela agreed, adding that, “The ‘higher for longer’ environment will challenge Canadians’ resiliency, and the true test will come when these renewals start to hit. The key will be for lenders and mortgage professionals to understand the different realities across Canada and think of the consumer and solutions we can offer to support them.”

However, Primaris REIT’s Leslie Buist emphasized that, there’s no ‘one-size-fits-all answer’ for the entire Canadian market, “I think there will be a group of Canadians who are not impacted at all, another group that makes spending trade-offs in favour of lower cost purchases, and a group that is impacted by the economy. How big each of these buckets are is something we can’t answer, but I’m hoping for the best and that the most impacted group is small.”

By the end of the discussion – after panelists dispensed considerable, cautiously-optimist viewpoints – the SWI panel achieved the goals described by Michelle Khalili, Managing Director and Head, Equity Capital Markets at Scotiabank Global Banking and Markets: “Since its inception, The Scotiabank Women Initiative has focused on breaking down barriers and increasing professional and economic opportunities for women-led and women-owned businesses. We hope the insights presented help and support our women clients, and all those attending today, as they reach for success now and in the future.”

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