/Posthaste Nov 18: Rising insolvencies suggest Canadian consumers are slowly drowning in debt

Posthaste Nov 18: Rising insolvencies suggest Canadian consumers are slowly drowning in debt

Good Morning!

Is the world drowning in debt?

A new report by the Institute of International Finance states that global debt load has grown by a massive US$78 trillion since 2008 and had topped US$250 trillion by the first half of 2019.

“But the payoff has been modest: since 2008, the global economy has expanded by only $28 trillion, bringing global debt-to-GDP ratio to a record high of 320%,” the IIF said.

On the domestic front, Canadian consumers also appear to be stretched, with debt-to-income hovering at a record high, debt growth turning up again, and savings weak, according to BMO Capital Markets.

At the same time, just under 12,000 consumers filed for insolvency in September, according to the Office of the Superintendent of Bankruptcy — a 19% increase from a year earlier and the biggest annual gain since 2009. So far in 2019, there have been 102,023 consumer insolvencies, the second-most for the first nine months of a year in records dating back to 1987, according to a Bloomberg report.

While the figures are at odds with strong employment and low interest rates, there are structural issues at play in Canada, too — with households borrowing more and saving less. People are racking up debt on bigger houses and are parking less funds in their RRSPs and other savings instruments.

“… Weak savings rates are part of a broader picture of a weakened household sector, including a recent upswing in consumer insolvencies. To some extent, the sector is almost a victim of its own past success — that is, future spending and housing activity was borrowed in the past few years,” BMO said in its report.

“And, we believe that the robust housing market of the past decade has played a significant role in the dwindling picture for personal savings rates, along with more traditional factors such as demographics and persistently lower real interest rates.”

Here’s what you need to know this morning:



  • Bell Media president Randy Lennox on the influx of streaming video services and what it means for the future of Crave in Toronto
  • The Canadian Council for Public-Private Partnerships holds a conference in Toronto
  • News conference with Grant Hunter, Alberta’s associate minister of red tape reduction in Edmonton
  • News conference with Alberta’s Finance Minister Travis Toews in Edmonton
  • The Tri-Cities Newcomer Employment Week supports immigrants in learning more about the Canadian labour market and helping them connect with meaningful employment and services in Coquitlam
  • Canada’s largest affordable housing conference will be held over three days in Vancouver

Canada’s existing home sales looked flat in October but the big picture is much more encouraging. “After a couple of challenging years, the broader housing market has brushed itself off and is firming again,” said BMO chief economist Douglas Porter in a note Friday. After a seven-month run of gains, sales are well above the 10-year average. Benchmark prices also continued their recovery, rising 1.8% from a year earlier, with a 0.6% gain on the month. “The solid results simply drum home the point that the housing sector has returned to the status of a growth driver, rather than the growth dimmer it had been over the past two years,” Porter said. “The related pick-up in household borrowing is a key reason that the Bank of Canada has been a bystander to the global rate-cut parade.”


— Please send your news, comments and stories to [email protected]. — Yadullah Hussain @yad_Fpenergy

With files from The Canadian Press, Thomson Reuters and Bloomberg


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