At first glance, the latest economic indicators appear to be good: GDP was up in September and the third quarter as economic output increased.
But average Canadians reduced their overall spending and say they are planning to spend even less during the holidays.
So how well is the economy actually doing right now?
“This is one of those cases where despite the the top line number looking pretty rosy, it’s actually a pretty difficult situation, and consumers are feeling it,” says Richard Forbes, principal economist at the Conference Board of Canada.
“Consumer confidence has been basically at historic lows all year, and that’s a reflection on how consumers are feeling about the overall economy and the job market and and those types of economic indicators.“
Statistics Canada reported Friday that gross domestic product (GDP) was up more than expected in September, allowing Canada to avoid a technical recession of two straight quarters of falling GDP despite the trade war and tariff uncertainty.
There was also good news for Canada’s job market with the unemployment rate falling slightly in October, and marked the first drop in three months. However, at around seven per cent, the unemployment rate is still the highest it’s been in about four years, and for youth, the unemployment rate is about double the national average.
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But the Statistics Canada report also showed, on a per capita basis, household spending fell an average of 0.2 per cent from July through September, and a recent survey report from the Bank of Montreal shows 41 per cent of respondents plan on spending less during the holidays compared to last year.
Canadians may feel they are struggling more than some of the good news in these economic reports suggest, according to some experts.
“If, for example, you get a report that says job numbers came in really well with ‘X’ amount of jobs added to the economy and you are still jobless, it doesn’t have any impact,” says personal finance expert Rubina Ahmed-Haq.
“Yes, on a macro (overall) level, Canada’s economy might have grown slightly, but as an individual, if you’ve been seeing that every few months those same items get more expensive, this doesn’t mean much to you.”
The Consumer Price Index for October showed prices increased on average 2.2 per cent compared to the same period in 2024, and prices for food purchased in stores specifically increased 3.4 per cent.
Although the report was slightly better than September’s, it still shows consumers are faced with higher prices this year than last year.
Most economists, financial analysts and policymakers alike are trained to look beyond the headline numbers on these economic reports to see what the underlying trends are.
“Make no mistake about it, the economy is in a pretty recessionary environment right now. The consumer and business uncertainty is still there because we still don’t know what’s going to happen with the U.S. trade policy,” says Forbes.
“A lot of consumers have been increasing their precautionary savings, and businesses have been hesitant to hire as well. There are some positive signs that growth might start to pick up heading into 2026, but it’s gonna be going to be at at a tepid pace, if any.“
The Bank of Canada acknowledged the “cautious” consumer early in November as part of its summary of deliberations, and said the reason many are expected to spend less during the holidays likely relates to their concerns about finding or keeping a job.
“If you’re on a fixed income, if your job prospects are not as plum as somebody who has technical skills, this doesn’t mean much to you because your individual situation hasn’t changed,” says Ahmed-Haq.
“It does show that there is a little bit of hope that these numbers will reflect with better and more jobs, but from an individual basis, we often can be in a recession on our own, whereas the rest of the economy is doing well because you just haven’t caught that break.”
A separate report form the Bank of Canada said in order to improve affordability in Canada, the economy must become more productive. adding that, in theory, boosting production will spur job growth, higher wages and keep prices stable.
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