Canadian businesses and consumers are still feeling the weight of trade uncertainty, but the latest reports from the Bank of Canada offer a cautiously optimistic note, perhaps the storm won’t be as fierce as once feared.
Yes, the dark cloud of tariffs hasn’t completely passed. The Bank’s most recent business outlook survey shows that 28 percent of Canadian firms are bracing for a recession. That’s down slightly from last quarter’s 32 percent but still nearly double the percentage from just a few quarters ago. Clearly, anxiety isn’t evaporating overnight.
What’s encouraging, though, is that the panic appears to be cooling. While sales outlooks remain broadly pessimistic a natural reaction to a slowing global economy there are subtle signs of resilience, especially among exporters. Many of them report not being directly hit by tariffs, and their tone is slightly more upbeat than before. It’s not celebration-worthy yet, but in today’s uncertain trade climate, small improvements matter.
On the consumer side, however, the picture remains cloudy. The companion survey focusing on household sentiment reveals that spending intentions are weakening further, thanks to the lingering threat of new tariffs. People are worried, and rightly so. The job market doesn’t feel strong to many Canadians, and fears of job loss remain elevated. When paycheques feel insecure, it’s no surprise that people think twice before making big purchases.
Both reports land just ahead of the Bank of Canada’s next interest rate announcement on July 30. It’s a pivotal moment. The central bank must weigh these conflicting signals cautious optimism from exporters, anxiety from consumers, and an economy that’s trudging forward under a weight of uncertainty.
At the end of the day, while the worst-case trade scenarios may be receding, the aftershocks are still rippling through the economy. Policymakers, businesses, and households alike would be wise not to let their guard down just yet. We’re not out of the woods but maybe, just maybe, we’re seeing the edge of the forest.
