Jump to content
House Price Crash Forum
Sign in to follow this  
zugzwang

Canadian Household Leverage Hits New Record

Recommended Posts

Carney's first miracle looking just about over.

http://soberlook.com...rage-still.html

Saturday, September 14, 2013

As discussed a few months back (see post), Canadian households continue amass higher levels of debt. At this point in the cycle, consumer leverage should have stabilized - particularly given tighter lending standards imposed by the government. However household credit outstanding as a fraction of disposable income hit another record last quarter.

Household+credit+to+disposable+income.PNG

The good news is that Canadians' net worth has been improving and the debt growth remains slow relative to pre-recession levels. That doesn't mean the situation is without risks. Canada's household leverage is now materially higher than that of other nations who love credit, namely the UK, Spain, and the US. The overall consumer debt levels are also rising as a fraction of the nation's GDP.

Household+Debt+to+GDP.PNG

This rising debt burden could inhibit the nation's economic growth because the consumer is less likely to contribute to any expansion without further debt increases. The currency markets are not ignoring the situation, with the Canadian dollar moving lower (USD moving higher) on the news on Friday.

"The household debt number shows you can't expect the Canadian consumer to contribute much to Canadian growth, and reflects the troubles the Canadian economy still faces, which is not a positive for the currency," said Adrian Miller, director of fixed-income strategies at GMP Securities LLC in New York. "Any strength in the Canadian dollar has to be discounted, as the bias is still to the downside as the U.S dollar gains strength with a better economic performance and expected tapering from the Fed."

Edited by zugzwang

Share this post


Link to post
Share on other sites

I don't suppose anyone in Downing Street remembered to check his CV and take up references?

I'm sure Cameron and Osborne would be over the moon if Carney could get UK households to increase their debt to disposable income ratio by 5% a year as Canada has been doing over the last decade or so. A debt-fuelled illusion of prosperity kept Labour in power for 13 years.

Share this post


Link to post
Share on other sites
I don't suppose anyone in Downing Street remembered to check his CV and take up references?

They wanted a bubble blower and that's what they got. He's the perfect candidate from an electoral viewpoint. Of course he may screw the economy longer term- but by then Osbourne and Co. will be settled in their new jobs in the financial sector, being paid the big bucks for the contents of their little black books.

Share this post


Link to post
Share on other sites

The whole concept of debt has changed, forced change......the amount does not matter because the chances are it will never be repaid anyway.......how much you can get, what you can buy with it, and how much they charge for it, are the more important points to consider........borrow a million £widgets to buy a small home costs a third of a months income...when interest rise it will still be a third of a months income because when wages rise interest rates will be sure to rise.....can't have people saving money, not good for the economy. ;)

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • The Prime Minister stated that there were three Brexit options available to the UK:   209 members have voted

    1. 1. Which of the Prime Minister's options would you choose?


      • Leave with the negotiated deal
      • Remain
      • Leave with no deal

    Please sign in or register to vote in this poll. View topic


×

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.