OTTAWA (Reuters) - Consumer confidence in Canada dropped for a third consecutive month in December, hitting a 27-year low as a “psychology of recession” tightened its grip on Canadians, the Conference Board of Canada said on Monday.
The index in December fell to 67.7 from 71.0 in November, the lowest mark since the 63.0 recorded during the recession of 1981-82. The index was 100 in 2002.
“Consumers continue to be gloomy about their financial situation, indicating that they are financially worse off today than they were six months ago. Similarly, they expect to be worse off six months from now,” Conference Board chief economist Glen Hodgson told a news conference.
“People understand that the U.S. economy is in recession, they’re worried about the impact on exports and their own jobs now ... in the last month that loss of confidence has become very personal. People are worried about their own financial circumstances.”
He also said the board was revising its forecast for 2009 and would most likely come out with a gloomier set of figures early in the new year.
Last month the board said the economy in the province of Ontario -- Canada’s manufacturing heartland -- would grow by just 0.8 percent next year.
The survey showed confidence across the country dropped in December, most notably in Ontario, despite steadily falling prices for gasoline.
“People are now translating the bad news in the United States into anticipated bad news from themselves. But part of this is also psychological because we have not see the kind of decline in our economy that’s happened in the United States, in Japan and Europe,” said Hodgson.
The Conference Board last week said Canada needed a stimulus package of at least 1 percent of gross domestic product, a figure Hodgson said was equivalent to a sum between C$10 billion ($8.2 billion) and C$13 billion.
“If the psychology of recession is as strong as it appears to be now, based upon these numbers, then something bigger than that -- 1 percent of GDP -- will probably be required,” he said.
The only bright spot was that a slightly larger number of consumers said now was the time to make major purchases.
The index is based on a poll of 2,000 Canadians that the board carried out between Dec 4 and 12 and which is considered accurate to within 2.19 (correct) percent, 19 times out of 20.
Reporting by David Ljunggren; Editing by Frank McGurty