Sometimes, recessions can breed a hunker-down-and-save mentality.
Not so this time. Canadian household debt – a perennial worry in recent
years – has ballooned to a point where it’s now more than double 1989
levels – just as rising borrowing costs are set to squeeze budgets, a
national report cautioned Tuesday.
Household debt in Canada reached a record $1.41-trillion in December.
If that was spread among all Canadians, each person would carry more
than $41,740 in outstanding debt
– an amount 2.5 times greater than 1989 after adjusting for inflation
and population growth, according to a report by the Certified General
Accountants Association of Canada.
And Canadians are okay with taking on still more debt. Nearly 60 per
cent of respondents whose debt had increased through the recession –
and 92 per cent whose debt decreased or stayed the same – still felt
they could either manage it well or take on more debt.
More Discussions in our Globe Investor forums
2 replies
Last post by
Looter
5/7/2010 12:00:38 PM
The recession has done little to dampen Canadians’ enthusiasm for taking on debt, the 13-page study said.
“This report is another indication of Canadians’ readiness to consume
today and pay later,” said Anthony Ariganello, president and chief executive of CGA-Canada. “The concern is do they understand the full cost of paying later?”
Canada now has the dubious distinction of ranking first in terms of
debt-to-financial assets ratio among 20 OECD countries, with its
debt-to-income ratio hitting 144 per cent by the end of last year.
Read the study
“The growth in household debt has been strong during good times and
showed remarkable resilience during challenging times,” said Rock
Lefebvre, co-author of the report. Now, it seems “set to continue its
upward trend as we navigate interesting times.”
The culture of consumption – or the habit of unrestricted spending –
is likely one of the important factors explaining the unaltered trend
in household borrowing, the report added.
