You could sing that title to the tune of Tennessee Ernie Ford’s 16 Tons (what do you get, another day older and deeper in debt), but Stats Canada published another interesting and information filled report that the main stream media is howling about how Canadians is going to be foreclosed (on). (report National balance sheet and financial flow accounts, fourth quarter 2015)
The report itself has a great deal of useful information about the Valuation (for lack of a better term) of Canada and Canadians, and well worth having a read.
The major line in one of the tables that is being touted as the reason that Canadians are going deeper in debt. While these numbers are quite sobering in that the percentage of Debt to Disposable income is increasing and it is currently at 168% (i.e. for every $1 of disposable income, Canadians owe $1.68), however in another part of the report you can read:
On a per capita basis, household net worth was $263,200, up 1.5% from the previous quarter.
Thus my statement that we are Richer and also deeper in debt.
|Â||Â 3rd Q 2014||4th Q 2014||1st Q 2015||2nd Q 2015||3rd Q 2015||4th Q Â 2015|
|Debt to disposable incomeâ€||165.07||165.23||163.87||165.14||166.61||167.60|
|Credit market debt to disposable income||162.75||163.00||161.61||162.96||164.46||165.44|
|Consumer credit and mortgage liabilities to disposable income||155.36||155.59||154.20||155.50||156.99||157.96|
â€ “What the ratio tells us:Â This ratio compares debt to annual household disposable income. In general, the ratio suggests that the lower the ratio the greater the ability to manage debt through current income.”Â
The simplistic explanation overall is that Canadian assets have been increasing in value, with the housing bubble (in many areas, not Alberta though), the recovering stock market and the recovering loony as well. Are we actually saving more? I doubt it, I do believe that we are further in debt though (so yes I am agreeing with many financial pundits who are sounding warnings from this data).
The fact that debt is increasing vs. our disposable income is a more sinister issue. Are we simply deluding ourselves that since we are saving, we can also still build up more debt?