Ratehub survey: 54% of Canadians expect economy to worsen in 2026
Key takeaways
- Canadians expect the economy to worsen in 2026, while their cost of living rises.
- Inflation is a main financial concern for Canadians looking to make ends meet.
- Few Canadians have sufficient emergency savings to cover an unforeseen financial event.
It’s now all the more challenging to take a rose-tinted perspective of the Canadian economy, as Canadians report they're becoming increasingly pessimistic over their financial prospects. A recent survey conducted by Ratehub.ca finds that the majority of respondents expect economic conditions to worsen by the end of the year, while their pocketbooks face the mounting pressure of rising costs.
Why are Canadians pessimistic about the economy in 2026?
The survey polled 746 respondents from across Canada on their sentiments regarding economic growth, including factors such as inflation and their own financial health.
The top findings include:
- More than half of the respondents (54%) expect the Canadian economy to perform worse in 2026. Within this group, 12% anticipate economic performance to be much worse.
- Only 10% of respondents expect the economy to improve in 2026.
- Inflation is a dominant worry with 79% concerned about inflation's impact on their personal finances in 2026.
- Many of the respondents expect to be squeezed by a climbing cost of living. 68% expect their cost of living to rise in 2026, while only 29% expect income to increase.
- Many respondents say they are living close to the financial edge with 15% describing their situation as "strained" or "very strained".
- 20% of respondents say they would be able to cover expenses for only one month or less without their primary income (10% less than a month + 10% exactly one month), and only 29% have a cushion of more than six months.
What is the current state of the Canadian job market?
It’s no surprise that Canadians are feeling increasingly pessimistic about their finances, given they face the double whammy of a weaker job market and steeper interest rates, both of which have whittled purchasing power for many.
“More than half of respondents expect the Canadian economy to perform worse this year, and for many this isn't an abstract concern,” says Penelope Graham, Personal Finance Expert at Ratehub.ca “It reflects what they're already experiencing: slowing wage growth, a cooling job market, and the lingering effects of years of elevated interest rates. Add in the unpredictable ripple effects of U.S. trade policy and tariff threats on Canadian exports, and it's little wonder that optimism is hard to come by.”
According to Statistics Canada’s April 2026 Labour Force Survey, the economy lost 18,000 jobs last month, and the unemployment rate rose to 6.9% – an increase of 0.2% from March – as more people searched for work. This has been a growing trend post-pandemic; the proportion of people who have been continuously job hunting for 27 weeks or more is now 22.5%, up from the average of 17.1% recorded between 2017 to 2019.
How much have Canadian mortgage rates increased in 2026?
Ongoing uncertainty from erratic US trade policy – and now volatility due to the war in Iran – have also eroded affordability in the form of higher borrowing rates. Not only are the Canadian and US central banks unlikely to trim their benchmark interest rates this year due to rising inflation fears, but bond yields – which lenders use to underpin their fixed-rate borrowing products – have steadily increased since March 2025, resulting in higher fixed interest rates.
In 2026 alone, the lowest five-year insured fixed mortgage rate has increased by 24 basis points, from 3.85% in January to 4.09% today – and this increase has varied in size across lenders, up by 40 basis points in some cases. For borrowers who initially took out their rate in 2021, however, the increase is significantly more painful. In fact, a previous Ratehub.ca mortgage renewal study found that a mortgage borrower renewing their five-year fixed term in 2026 could expect to pay 24% per month – a dollar increase of $622.
How is inflation affecting Canadian household budgets in 2026?
According to the survey, inflation is a major cause of financial concern for a whopping 79% of respondents.
“While headline inflation has come down from its 2022 peaks, the cumulative effect of years of price increases has permanently raised the baseline cost of living,” says Graham. “Groceries, insurance, utilities, and rent are all measurably higher than they were three years ago. For most households, wages simply haven't kept pace and even though inflation may be cooling, the financial anxiety it created is far from gone."
Most recently, the April Consumer Price Index revealed the year-over-year pace of inflation rose by 2.8%, up from 2.4% in April. While rising oil prices due to the war in Iran are to blame for the lion’s share – gas prices spiked by 28.6% compared to the same time frame in 2025 – food inflation also continues to outpace the headline number, coming in at 3.5%.
All of that cumulatively stresses household budgets, at a time when Canadians are feeling less secure about their incomes.
“Perhaps no finding captures the squeeze Canadians are feeling more clearly than this one: 68% expect their cost of living to rise in 2026, while only 29% expect their income to follow,” Graham says. “That's a gap of nearly 40 percentage points, and it represents a real and growing threat to household financial stability.”
15% of respondents are living close to the "financial edge"
A worrying finding from the study is that many respondents feel they’re living close to their financial edge, with 15% describing their situation as "strained" or "very strained". The survey findings also show households are struggling to save sufficiently to project against unforeseen financial emergencies. 10% of respondents said they'd be able to cover their primary expenses for less than one month if they lost their primary source of income, with 18% saying they had a financial cushion of two- to three months. Just 29% of respondents would be able to manage financially for more than six months.
What can Canadians do to manage financial stress in 2026?
“For Canadians who are worried about their finances this year, taking a look at your budget and reevaluating priorities is a great first step,” says Graham. “Separate urgent items from important items. For example, if you have high-interest debt, like credit card debt, prioritize paying this down versus adding to your savings.”
Some practical tips for financially squeezed Canadians include:
- Explore debt consolidation options: For Canadians carrying stubborn debt, taking out a debt consolidation loan can be an effective way to reduce the interest rate that debt is being charged at. Moving debt to a loan with an amortized structure can provide a concrete payoff timeline to becoming debt-free sooner. Wondering if a debt consolidation loan is right for you? Check out Ratehub’s debt consolidation calculator.
- Reduce the amount of interest you’re charged: If a debt consolidation loan isn’t the right option for you, switching to a low-interest credit card, or to a card with an attractive balance transfer offer, can help fast-track paying off a balance.
- Prioritize an emergency savings fund: While it can be challenging to fund spare cash when funds are tight, setting even a small portion of your pay aside can help build an important buffer against unforeseen circumstances, such as job loss. Ensure your money is free from fees, and earns the best possible interest rate with a competitive high-interest savings account.
“The financial landscape is always changing and more than ever, we want to get the most out of our money and have our financial products work as hard as we do. Making informed choices on financial products can help consumers manage their finances,” says Graham. “Whether you’re considering consolidating your debt, getting a lower interest credit card, or opening up a new bank account, it’s important to do your research and make sure you’re not only getting a competitive rate, but also choosing a product that fits your needs.”
Methodology: Ratehub surveyed over 740 Canadians from March 19, 2026, to April 20, 2026. The survey included multiple-choice questions designed to capture consumer sentiment on the economy and finances