In the foggy economic climate hanging over the country, Canadians are checking their wallets with increasing anxiety. Recent polls suggest nearly 70% of us believe we’re either in a recession already or heading toward one. This perception drives real financial behaviors, regardless of whether economists have officially declared a downturn.
As I spoke with Kaitlin Last, a 32-year-old project manager in Vancouver, her concerns echoed what many feel: “My grocery bills keep climbing, my rent increased again, but my salary stays put. It feels like something has to give.”
This widespread sentiment comes despite Canada’s economy showing mixed signals. While inflation has cooled from its 2022 peak, the aftereffects of aggressive interest rate hikes by the Bank of Canada continue to ripple through household budgets. The housing market remains strained in major urban centers, and layoffs in tech and manufacturing sectors have contributed to economic unease.
“The technical definition of a recession—two consecutive quarters of negative growth—matters less than how people experience their financial reality,” explains Beata Caranci, Chief Economist at TD Bank Group. “When Canadians feel financially squeezed, they behave as if a recession is happening.”
This perceived recession has real-world implications. The Conference Board of Canada reports consumer confidence dropped 9.5 points in the last quarter, while household savings rates hover near historic lows. Meanwhile, credit card balances continue climbing—up 17.4% year-over-year according to Equifax Canada.
Financial planners across the country are fielding more calls from worried clients. Natasha Knox, a certified financial planner with Alaphia Financial Wellness in British Columbia, observes: “There’s a marked increase in anxiety-driven planning requests. People want recession-proofing strategies whether economists confirm a downturn or not.”
So what practical steps should Canadians take during this period of economic uncertainty? Financial experts offer several consensus recommendations.
First, building or strengthening an emergency fund remains foundational advice. “Three to six months of essential expenses should be readily accessible,” advises David Dyck, portfolio manager with Richardson Wealth in Calgary. “But don’t overlook the psychological benefit—having this cushion dramatically reduces financial stress, allowing for clearer decision-making.”
For those struggling to build savings while managing existing obligations, even small incremental additions help. “Setting up automatic transfers of just $25 per paycheck builds both savings and financial discipline,” Knox suggests.
The current high-interest environment also presents opportunities. “GICs and high-interest savings accounts are paying rates we haven’t seen in over a decade,” notes Preet Banerjee, personal finance commentator. “Money that previously earned negligible returns can now generate meaningful income while remaining liquid for emergencies.”
Debt management becomes particularly crucial during economic downturns. Cardholders carrying balances face interest rates frequently exceeding 20%—a substantial drain on monthly cash flow. “Prioritize high-interest debt reduction before economic conditions potentially worsen,” recommends Jackie Porter, financial planner with Carte Wealth Management in Toronto.
For homeowners, mortgage renewals present a significant concern. Nearly half of Canadian mortgages will come up for renewal within the next three years, potentially at higher rates than their original terms. “Speak with your mortgage provider about options before renewal,” suggests Victor Godinho of Kismet Wealth Group. “Some lenders offer early blend-and-extend options that might help ease the transition to higher rates.”
The employment landscape also requires attention. “Update your resume now, not when layoffs are announced,” advises career coach Sarah Vermunt. “Also consider how your skills might transfer to recession-resistant sectors like healthcare, essential services, or government work.”
While cutting expenses seems obvious, strategic reductions matter more than across-the-board cuts. “Examine subscriptions and recurring charges first,” Porter suggests. “Most Canadians discover they’re paying for services they rarely use.”
Food costs remain a major pressure point, with grocery prices up 22.9% since 2020. Meal planning, bulk buying, and embracing cheaper protein alternatives can help manage this persistent budgetary strain. “The average household can reduce food waste and save 15-20% through better planning,” explains registered dietitian Joanna Li.
Investment strategies often require counter-intuitive thinking during downturns. “Recession fears frequently trigger emotional selling, locking in losses just when prices are depressed,” cautions Dyck. “History shows investors who maintain disciplined contributions during market declines often benefit most during subsequent recoveries.”
This perspective resonates with Melissa Ibrahim, a 45-year-old teacher in Montreal who weathered previous downturns. “During the 2008 crash, I panicked and sold investments. That mistake taught me to stick with my plan regardless of headlines. This time, I’m actually increasing my contributions as prices fall.”
For young Canadians experiencing their first potential recession as adults, this period offers valuable lessons in financial resilience. “Economic cycles are inevitable,” Banerjee emphasizes. “The habits formed during challenging times—tracking expenses, prioritizing savings, distinguishing wants from needs—create lasting financial strength.”
Perhaps most importantly, financial experts stress maintaining perspective. “Economic contractions eventually end,” Caranci notes. “Canada’s diverse economy has proven remarkably resilient through previous downturns.”
Whether the current economic uncertainty officially becomes a recession or remains just widespread anxiety, the preparation strategies remain valid. Building financial buffers, managing debt, seeking opportunity in volatility, and maintaining long-term perspective will serve Canadians well regardless of what economists eventually label this period.
As Last put it while reviewing her newly created budget: “I can’t control what happens with the economy, but I can control how I respond to it. That alone makes me feel more confident about whatever comes next.”
