Canadian households are carrying an increasing amount of personal debt. Debt as a proportion of disposable income of Canadian households has reached a high of 146% in the first quarter of this year. This means that for every dollar earned, a Canadian household owes $1.46. Meanwhile, the rate of personal bankruptcies has increased significantly. According to the latest report from the Certified General Accountants Association of Canada (CGA), it rose from 20.5 per 10,000 inhabitants in 1990 to 56.6 in 2010. Today, many families are afraid of being unable to repay their mortgages or to meet their other obligations. Obviously, this has an impact on their behaviour as consumers. Consumer spending accounts for more than 60% of Canada’s GDP.
The same report by the CGA noted that households are increasingly using credit to buy the same quantity of durable goods and more likely to use credit to finance their current consumption. The situation of vulnerable consumers is more troubling. By this we mean the unemployed, working poor, single parent families, seniors and students.
In Canada, the recovery in employment is modest. According to Mr. Carney, if the country has regained all of the 400,000 jobs lost during the recession, this statistic should be interpreted with caution as often many of the jobs generated are part-time. Furthermore, well-paid jobs in manufacturing are now a thing of the past.
According to the demographics, an aging population will result in increased spending for health care, retirement benefits and other benefits for these citizens. Retirement incomes have been adversely affected by the economic downturn, even in the middle class seniors with savings. In addition, older workers have difficulty finding employment. The harmful effects of long-term unemployment on family dynamics are well known. According to Citizens for Public Justice, approximately 500,000 Canadians have exhausted their EI benefits without finding new work. The same source reports that food and shelter prices have increased faster than the overall consumer price index.