Why Canadians can’t stop borrowing

Why Canadians can’t stop borrowing

The Globe and Mail is reporting that Canadians never look more financially irresponsible than they do in the most widely followed measure of national indebtedness.

The Globe and Mail is reporting that Canadians never look more financially irresponsible than they do in the most widely followed measure of national indebtedness.

Through successive years of slow economic growth, the debt-to-disposable-income ratio has been stuck at or near record levels. At end of the third quarter of 2016, every dollar of take-home pay was matched by $1.67 in debt.

Partly, it’s that interest rates are so low. Whether you’re getting a mortgage, financing a car purchase or using a line of credit, rates today are very likely as cheap as we’ll see in our lifetimes. But there’s more to it than that. Incomes – stagnating incomes, that is – are also a big factor.

After-inflation earnings growth has been on a generally declining track since the last recession, but the downward momentum has picked up in the past couple of years.

According to the latest Statistics Canada numbers, 2016 was shaping up as a year where inflation-adjusted earnings for salaried workers showed zero growth and were down 0.4 per cent for hourly workers.

Article by Rob Carrick/The Globe and Mail

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