In spite of debt warnings Canadians to increase their holiday spending
The Organisation for Economic Co-operation and Development (OECD warns in a recent report that rising private debt loads in Canada as well as the UK and South Korea pose a risk to further growth. The three lead the world in household debt.
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Consumer debt in Canada
The OECD report notes that higher indebtedness does not mean there are necessarily going to be problems. However, it does increase vulnerability to shocks. If the economy turns down or interest rates are raised substantially consumers might have more difficulty handling their debt load.
In Canada, consumer debt is over 100 percent of GDP higher even than in the UK and South Korea where it is over 80 percent.
On a brighter note, the OECD updated its expectations for economic growth from September predicting that the Canadian economy would grow by 3.2 percent this year the best performance among the G7 countries.
Canadian's debt-to-income ratio had reached a record back in September as discussed in a September Digital Journal article.
Canadian holiday spending still expected to be at record levels
Canadians are likely to spend more in spite of their debt loads, probably because most of them think they know how to manage their debt.
A new Manulife Bank of Canada survey shows that 54 per cent of Canadians think they can manage their debt. 64 percent claim they aim to become debt free. Almost a quarter of consumers were embarrassed to talk of the amount of their debt and another 40 percent did not know where to turn for help.
Less than one third achieved their debt reduction goals in the last year. 53 percent of Canadians believed financial challenges took their toll on mental or emotional health. One third also claimed they had a negative impact on physical health as well.
In spite of the negative associations with increasing debt, Canadians are expectedto spend at record levels this holiday season.
A survey by website RetailMeNot.ca found that Canadians are planning to spend on average $1,400 per person this season. The survey was of 1,500 adults. 43 percent said they tended to overspend.
With respect to gift giving each person committed an average of $653, a full one hundred dollars more than last year. It was also $171 more than the average American.
Black Friday and Cyber Monday
In spite of their intention to spend, only 26 percent said they intended to take advantage of deals on Black Friday and Cyber Monday on November 24 and 27th. This contrasts with Americans 54 percent of whom planned to take advantage of the deals.
However, 60 per cent of those responding thought that excitement about the two deal days was growing in Canada.