Title:The current state of Canadian family finances: 2009 report.
Subject:Family – general|split|Family – finances|split|Family – statistics
Publisher:Vanier Institute of the Family
Place of Publication:Ottawa
Date of Publication:2010
Of particular interest to readers of The Current State of Canadian Family Finances is the Bank of Canada’s conclusion that, among five key risks to the Canadian financial system, only one has become more pronounced. That risk concerns household balance sheets in households that continue to take on more and more debt relative to income. This annual report has warned about this alarming trend in previous issues.
Many Canadians are worried about their debt loads. A recent Manulife Financial poll found “that paying down credit cards and lines of credit is a growing financial priority among Canadians.”4 About 28% pegged debt elimination as their main goal, up from 24% a year earlier, and marking a five-year high. The second priority is paying down the mortgage, and the third is saving for retirement. Will Canadians follow through with corrective actions … or is this just wishful thinking?
The economy has clearly moved off the bottom and a slow recovery seems to be the consensus outlook. Even so, many difficulties and challenges remain. So far, much of the recovery has been the result of government fiscal and monetary stimulus. The global economy is still waiting for the private sector to play a bigger role.
Key features characterize the economic outlook in Canada:
Interest rates are at record low levels and are likely to remain there for at least several more months.
Government deficits are at record high levels with ongoing deficits and growing government debt foreseen for several more years.
The Federal and Provincial governments, the Bank of Canada and CMHC (Canada Mortgage and Housing Corporation) will likely begin to formulate and apply “exit” strategies to reduce deficits and pull back on the monetary and fiscal levers that are now in place. This will involve hard choices, including rising interest rates, spending cuts, tightening mortgage terms and tax increases.
There are long years of recovery ahead.