With an index score of 98, Canada beats the global average by 11 points and bests its southern neighbor by 16 points.  In fact, Canada is one of only two countries in the top ten outside of Asia (the other being Brazil).

“Over the past six months, Canadian consumers have stopped talking about recession and changed the conversation to recovery,” said Carman Allison, Marketing and Communications Director, Nielsen Canada.  “We’re more optimistic about our job prospects and personal finances, and are ready to open our wallets and put the recession behind us.”

So how has this renewed confidence manifest itself?  Canadians are more likely to pay off debt (39% vs. 31% globally) and much less likely to save or invest in the markets (27% vs. 49% globally).  Interestingly, the high level of confidence contrasts with the fact that 70 percent of Canadians still believe that their economy was in recession, despite the fact that the Bank of Canada declared it technically over last summer.  But 40 percent believe that Canada will be out of recession in 2010.

Concerns remain.  The top three issues were increasing utility bills, personal debt and the economy.  Canadians – and Americans – are much more worried about debt than the rest of the world (13% compared to just 7% globally).

“Even while showing faith that we are in recovery mode, Canadians are planning to retain some frugal habits. Economists expect this to be a slow recovery, so consumers will continue to seek value and look for ways to stretch their shopping dollars in the near term and perhaps even longer into the future,” concluded Allison.

Download the report on Canadian Consumer Confidence.

Declines were especially steep during the last four weeks of the quarter, which saw the collapse of Lehman Brothers, the near-collapse of Merrill Lynch, and the government bailout of AIG.

Traditional mass retailers (excluding supercenters), department stores, and office supply stores saw the most dramatic declines in the number of shopping trips last quarter vs. a year ago.  Trips to mass retailers dropped by 9.1%, trips to department stores were down by 8.9%, and trips to office supply stores fell by 7.9%, Nielsen reported.

Retail channels offering low prices, strong value, and mostly “need to have” products — versus “nice to have” items — fared the best during Q3 2008.  Trips to online retailers (+7.5%), supercenters (+3.6%), and dollar stores (+3%), for instance, showed the largest increases, compared with Q3 2007.

More affluent consumers looking for bargains drove the growth in trips to value retail channels, while lower-income households adopted more drastic cost-cutting measures, eliminating shopping trips entirely, according to Nielsen.

U.S. consumers surveyed by Nielsen in late September and early October also reported having significantly less discretionary income than their global peers. 

Almost 25% of U.S. consumers reported having no spare cash after covering their essential living expenses.  In comparison, just over 10% of consumers worldwide reported a similar lack of expendable income.

U.S. consumers were also more likely than consumers worldwide to use expendable income to pay off debts, Nielsen found.  More than 35% of U.S. consumers reported using their spare cash for debt payments, while only 30% of consumers worldwide reported the same.

In early October, Nielsen’s holiday retail forecast estimated that 85% of U.S. consumers plan to spend the same or less on holiday shopping, versus 2007.

Stay tuned on Nielsen Wire for regular updates on U.S. retail trends, and other key economic indicators.