Wealthy Consumers Drive Global Economy Despite Canada's Economic Slowdown

The global economy is performing well due to tech spending, fiscal stimulus, manufacturing growth, and consumer spending. However, this wealthier segment of consumers is becoming increasingly bifurcated from those who are less affluent. The latter group is struggling.

A tracker of high-end consumer spending remains steady, including cosmetic, restaurant, and luxury brand purchases. This data is based on year-over-year same-store-sales or overall sales to mitigate seasonality factors. However, this is quarterly data from earnings reports, which are slower-moving.

To get a more complete picture, the tracker will be combined with card spending data in discretionary categories. These consumer spending trends have been declining rapidly, possibly due to higher energy prices taking a toll. The Canadian economy has also seen some slowdown, particularly in retail sales and inflation-adjusted spending since early 2025.

The TSX is advancing despite the Canadian economy's fragility, with two consecutive quarters of negative GDP. However, this is largely attributed to trade and inventory volatility rather than a recession. The market remains strong due to AI-related news and excitement, as well as robust flows, which have contributed to the divergence from economic data.