The Economy And You

Summary

Consumer Spending

All of our financial activities, whether they involve spending, borrowing or saving, play a key
role in our economy. Many different factors play a role in our decision to spend or save our
money. These factors include our confidence in the economy and the future, our income and
employment situation, interest rates, trends, age and lifestyle. If we feel financially secure and
believe our economy will continue to do well, we are more inclined to spend money. If we feel
financially insecure about our economy we will tend to spend less money. The general level of
savings in the economy is important because what one person saves, another person borrows
to spend or invest. If we Canadians save too little, there may not be enough money available
within Canada to fuel new growth and investment.

Corporate Spending

When interest rates are high, businesses may put off investments or expansion. But when the
cost of borrowing is low, businesses tend to invest in their enterprise which ultimately
strengthens the economy. Every business plays a role in providing employment, products and
services. When companies tend to grow, this usually means job growth. This, in turn means a
higher rate of employment, increased consumer confidence, and ultimately, more spending.

Simplified Explanation

If we feel financially secure and believe our economy will continue to do well, we are more
inclined to spend money. If we feel financially insecure about our economy we will tend to
spend less money and save more. When interest rates are high, businesses may put off
investments or expansion. When companies tend to grow, this usually means job growth. This,
in turn means a higher rate of employment, increased consumer confidence, and ultimately,
more spending.