Canadians' debt hits record $1.5 trillion
More being borrowed now than during recession
The household debt of Canadians has hit an all-time record of $1.5 trillion, a group that speaks on behalf of the accounting industry says.
"The debt of a typical household is rising," said Rock Lefebvre, a vice-president with the Certified General Accountants Association of Canada, in a report released Tuesday that examines Canadians' financial health.
The report reveals several alarming trends, as single-parent families, retired Canadians, and those with annual household incomes of less than $50,000 face a bleak financial situation, the group says.
Statistics Canada data shows consumer spending declined in the first quarter of 2011, a sign that Canadians are tightening their belts.
But the CGA report found people are still struggling to keep up with the necessities. More than half of indebted Canadians are borrowing just to afford day-to-day living expenses like food, housing and transportation, the report says.
Governments and central bankers have ushered in a new wave of fiscal austerity, pledging balanced budgets in the years to come. But data in the CGA report shows Canadians are having a hard time following suit.
"It’s important that the dynamics of household indebtedness remain high on the radar of policy-makers," says Lefebvre, "particularly when it comes to policies and incentives that encourage Canadians to improve their finances."
The report reveals that the average household debt-to-income ratio reached a record high of 146.9 per cent in the first quarter of 2011, compared to 144 per cent in late 2009, as the recession was starting.
If that debt was spread evenly among all Canadians, the typical family with two children would owe an estimated $176,461 in household debt.
The report also found that more Canadians are carrying debt into retirement, with one-third of retired households carrying an average debt of $60,000 and 17 per cent carrying $100,000 or more.
The report was commissioned by CGA, but administered by research firm Synovate. It consisted of 1,525 online interviews between Feb. 2 and 11.
The company says that with such a sample size, a sampling error of plus or minus 2.51 per cent is produced 19 times out of 20.