More rate hikes by the Bank of Canada could “spell trouble” for a growing number of Canadians facing financial headwinds, Angus Reid Institute said in an economic outlook released June 6.

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The pollster found that the number of people who fell into the “struggling” category of its Economic Stress Index rose six percentage points to 31 per cent, from 25 per cent last June.  Angus Reid started the index in January 2022 to analyze Canadians’ financial circumstances, creating four categories: struggling, uncomfortable, comfortable and thriving.

Struggling represented the largest share of its latest economic stress index, while comfortable accounted for 26 per cent of respondents, 22 per cent said they were uncomfortable and 21 per cent were thriving.

Households more likely to have children under 18 appeared to be at greater risk of experiencing economic stress, the poll suggested, with 37 per cent of those in the 35-44 age group and 38 per cent of those in the 45-54 age group in the struggling category.

Saskatchewan and Newfoundland and Labrador reported the highest percentage of people in the struggling category at 43 per cent and 37 per cent, respectively.

“Those who find themselves in dire straits financially are not optimistic about the year to come,” the pollster said in the report, which surveyed 2,808 Canadians from May 30 to June 2.

In the struggling category, 68 per cent said they expect to be financially worse off next year. The cost of living is their biggest concern.

Statistics Canada said the consumer price index in April accelerated 4.4 per cent from the year before. That, coupled with stronger-than-expected economic growth in the first quarter, has more economists calling for an interest rate hike when the Bank of Canada announces its latest rate decision on June 7.

The rising number of people experiencing financial stress lines up with another survey release on June 6 that found Canadians’ view of where the economy is heading darkened once again after briefly showing some signs of improving, based on the April edition of the Maru Household Outlook Index (MHOI).

A growing majority of people in May said they think the economy is headed in the wrong direction, with 64 per cent feeling that way compared to 61 per cent, Maru Public Opinion said. The last time people felt positive about the economy was in November 2021, when 54 per cent said they felt good about where things were headed.

More people said they held a negative view of the economy’s prospects over the next 60 days, with 62 per cent indicating they didn’t think things would improve, up three percentage points from the prior reading.

The MHOI’s reading rose to 87 in May from 85 in April, just off the index’s lowest reading since it began in 2021. The base number for the index is 100. A result above 100 indicates optimism and below that threshold indicates pessimism. May’s reading was still well off its July 2021 high when it registered 107.

Maru compiles its household index each month by asking a panel of about 1,500 people a series of questions about the economy’s prospects over the next 60 days.

“What’s driving the MHOI this month are mostly derived from positive views on long savings and the ability to purchase household necessities — outpullling negative sentiments on the state of the economy — which is still decidedly negative for upwards of two thirds of consumer-citizens — and investing, while spending and all other categories assessed are virtually stagnant,” Maru said in a press release.

Almost half the survey’s respondents said they will put money aside for retirement, up five percentage points from 44 per cent in April, and 86 per cent said they will be able to buy necessities for their families over the next two months, up from 82 per cent last month. Also, 64 per cent said they have two months of savings set aside for an emergency expense, up one percentage point from April.

The resilience of the Canadian consumer has continued to surprise markets.

Last week, Statistics Canada said that first-quarter gross domestic product (GDP) increased 3.1 per cent, outpacing Bay Street and Bank of Canada forecasts of 2.5 per cent and 2.3 per cent, respectively.

Economists attributed most of the strong results to continued consumer spending. But credit history company Equifax Inc. last week said Canadians were dipping into their savings to cover higher monthly payments as they continued to ramp up debt to a record $2.3 trilliondebt to a record $2.3 trillion.

“While the MHOI caught some good vibes on savings this month, they’re now half as much as last year’s fourth quarter’s 5.8 per cent,” said Maru, referring to the household savings rate, which Statistics Canada said fell to 2.9 per cent in the first quarter.

Maru runs a parallel survey of consumers in the United States, and every measure it tracks fell in May, “which means something more chilling may be settling in before the heat of summer arrives,” the company said.

• Email: gmvsuhanic@postmedia.com | Twitter: gsuhanic