Already a Globe Unlimited subscriber? Log in to keep reading.
- Canadians richer but deep in debt
- What to expect from house price report
- What to expect from the Fed today
- Stocks mixed ahead of Fed decision
- Loonie below 74.5 cents
- And then there’s Trump, and his taxes
A report from Statistics Canada later in the morning will be all about pleasure and pain.
Pleasure: It’s not a word you’d normally associate with something called the quarterly national balance sheet accounts, but this 8:30 a.m. ET report will tell us how rich we are.
Pain: This one’s more apt as the report will also tell us how much we owe.
We’re expected to learn that we’re wealthier, given the rise in stock values. But expect to see, too, that our debt burden is at a new high.
There will be several measures in the Statistics Canada report.
Paul Ferley, Royal Bank of Canada’s assistant chief economist, expects the report to show that household asset balances rose 2 per cent in the fourth quarter of last year to $12.4-trillion, pushed higher by a 3.8-per-cent rise in Canada’s benchmark stock index, the S&P/TSX composite.
On the other side of our ledger, household liabilities presumably rose in the final three months of 2016 amid a slower pace of mortgage growth but a pick-up in other consumer credit.
What that all should mean, Mr. Ferley said, is that household net worth climbed by $210-billion to $10.3-trillion.
But as we’ve been hearing for years now, our borrowing is out of hand, so much so that the report is expected to show the key measure of household debt to disposable income at its highest level ever.
The last measure put that at 167 per cent, or $1.67 owed for every dollar of income. Mr. Ferley expects it’s now 168 per cent. Or, for those who clearly didn’t use a calculator when they were getting in way over their heads, $1.68 for every $1.
“Encouragingly, growth in assets and net worth are expected to have marginally outpaced that of debt,” Mr. Ferley said.
“Accordingly, the debt-to-asset and debt-to-net worth ratios will both likely edge lower to 16.4 per cent and 19.7 per cent, respectively, from 16.5 per cent and 19.8 per cent.”
The debt burden could be worse, actually, because it was the fourth quarter, which traditionally shows a slowdown, noted Bank of Montreal senior economist Benjamin Reitzes.
“Also, disposable income growth was solid in Q4, helping to restrain the increase in debt ratios,” Mr. Reitzes said.
“This release also includes details on household assets,” he added.
“After rising to a record high in Q3, net worth as a share of disposable income likely pushed higher still with home prices and the TSX moving up. Over all, Canadian balance sheets are in decent shape, as interest rates remain low even after the recent back-up.”
Thirty minutes after the Statistics Canada report, we’ll learn from the Canadian Real Estate Association why we’re in so much debt.
The CREA report will show Toronto home sales pushing higher in February, and prices at dramatically high levels. Vancouver will show a sales drop but still inflated prices.
Across Canada, Mr. Reitzes expects the CREA report to show sales down 2 per cent in February from a year earlier, with average prices up 2 per cent. The MLS home price index, a better measure, is expected to show a rise of 14.5 per cent.
This article was sourced from http://naijanewstalk.com