This is from the Toronto Star.
The problem is not just rising gasoline prices. Oil is used in the manufacture of numerous goods and also to transport them so the price of consumer goods in general will be increasing. Many Canadians are already stretching their credit to the limit and with the threat of more job losses or for business people reduced sales it is not surprising that confidence is going down especially in areas facing depression such as Ontario.
Canadian optimism takes a nosedive TheStar.com - Business - Canadian optimism takes a nosedive
Conference board blames gasoline prices, lots of gloomy headlines
June 03, 2008 RITA TRICHURBUSINESS REPORTER
Consumer confidence in Canada has plummeted to its lowest level in about seven years, and skyrocketing gasoline prices may be at least partly to blame for the soured sentiment, the Conference Board of Canada says.
The board's monthly index of consumer confidence fell seven points to 85.8 in May, the lowest point since December 2001, as Canadians fretted about their future incomes and ability to make major purchases.
"Part of the reason behind the drop in consumer confidence could be the rise in gasoline prices observed over the past month," according to the report, which was released yesterday. The board noted that consumer confidence also took a major beating in the fall of 2005, after Hurricane Katrina caused a spike in gasoline prices.
The board's latest survey is based on more than 2,000 telephone interviews conducted in early May. That was before crude-oil prices hit a record of $135.09 (U.S.) a barrel on May 22.
Oil prices have since retreated from that high, but gasoline remains a sore spot for consumers. The average price for regular gasoline paid by Canadians yesterday was $1.3274 (Canadian) a litre, according to the Gasbuddy.com website. CIBC World Markets has predicted the average price will top $1.40 a litre this summer.
Douglas Porter, deputy chief economist with BMO Capital Markets, suggested "gloomy headlines about the U.S. downturn, factory layoffs and the possibility of soaring food prices" also played a role in May's decline in consumer confidence.
The report said every region of Canada reported "waning levels of confidence," but Ontario had the largest decline, with the regional index shedding 9.6 points. Atlantic provinces experienced a decline of 9.1 points, while Quebec's index fell 6.6 points. Declines in oil-rich Western Canada "were not as pronounced."
Ontario and Quebec residents were also the most pessimistic about the job market and leery about making big-ticket purchases.
That cautious approach comes at a time when those provinces' manufacturing-based economies are being clobbered by the high Canadian dollar, soaring energy prices, falling United States demand and sharper competition from lower-cost Asian competitors.
Also clouding the outlook for consumers are signs that Ontario's beleaguered auto industry could push the national economy into a recession. The Canadian economy shrank 0.3 per cent in the first quarter of 2008, marking the first quarterly decline in five years.
More signals of a slowing economy are expected Friday with May's employment report. The consensus forecast is for scant job growth of 10,000.