Recent reports out of Canada and Australia paint a similar picture for consumers in both countries. Consumers are loading up on consumer debt and it is becoming a concern for regulators. Right now levels are about the same, consumer debt is approximately 150 percent of income.
Both Canada and Australia have experienced less unemployment that the United States or even England. This has left consumers feeling braver about the near future and more confident to take on a level of debt that exceeds their income.
The Bank of Canada is warning Canadians to take it easy and not go further into debt. The bank says they see consumer debt levels growing at a faster pace than income. They said, “In contrast, very favourable financing conditions are expected to buttress consumer spending and housing activity. Household expenditures are expected to remain high relative to GDP and the ratio of household debt to income is projected to rise further.”
This might be due to economic pressures in Canada and a greater reliance on easy credit to make ends meet.