The Canadian consumer, meanwhile, might be benefiting from somewhat cheaper gasoline, but their spending capacity is stretched thanks to a
record high level of household debt.
So, in summary these are some of the themes we might expect to see in the next chapter — the impact of technology and the growth of Asia; the normalisation of monetary conditions; the effects
of higher levels of household debt; and the capability of our workforce and businesses to be flexible, innovative and adaptable.
Though it boosts the economy in the short term,
high levels of household debt add pressure on the economy in the long run, as households are forced to cut spending in order to repay their debt.
Consumer spending is expected to continue to be a significant contributor to the economy, but the bank said it
believes high levels of household debt and a slowdown in the housing market will weigh on spending.
The most likely explanation for the ongoing subdued consumption outcomes is the combination of weak growth in real household income and
the high level of household debt.
A third issue is
the high level of household debt and housing prices.
This brings me to a third plot line: that is, how we deal with
the higher level of household debt and higher housing prices, especially in a world of more normal interest rates.
At the heart of this uncertainty is
the high level of household debt.
We had among the most leveraged banks of any country, a house price boom as large as America's or Spain's, and
higher levels of household debt than any other country in the world.
And few economists would advocate increasing Britain's sky -
high level of household debt, which is overwhelmingly associated with buying homes.
It led to
the highest level of household debt in relation to income in the world.
It predicted Canada's
high levels of household debt would amplify the effects of higher interest rates on consumption.
High levels of household debt are a concern, that gets even worse when you realize how concentrated it is.
«In fact,
a high level of household debt, particularly student debt, poses perhaps the largest obstacle to first - time homebuyers.»
Despite
the higher level of household debt, Canadian household finances are stable with consumer bankruptcies down by 1.7 per cent and 90 - day - plus delinquency rate falling by 6.4 per cent year - over-year.