RBC released its Canadian Consumer Outlook Index today which reported that despite continuing reports stating the economy is recovering quickly, Canadians are worried about their debt levels and are anxious about their jobs.
The Bank of Canada reported last week that consumer credit held by the big banks rose in December 2009 to $336B amount of consumer credit held by the country’s chartered banks rose to $335.6-billion in December, up $2B from the previous month and 15% over the previous year. It really has been an odd few years with the global economic crisis bringing down Lehman Brothers, bank bailouts around the world and it was the first recession in which real credit (or the level of debt people are taking on adjusted for inflation) has gone up.
The survey said that 58% of Canadians are concerned about their current level of debt. And when people are worried about having taken on too much debt, the last thing they need is to lose their jobs, and the survey also found that 26% say a member of their household is worried about losing their job or being laid off, which jumped up from 21% the previous month. Job security concerns were up in all provinces with the highest reported in BC (32%) and Alberta (31%).
Conversely, 45% of Canadians expect that their personal financial situation will improve over the next year, and 68% believe that interest rates will increased in the next 6 months while 28% believe they’ll remain the same.
Canadian Imperial Bank of Commerce chief economist Benjamin Tal commented that it looks like many people are over their head in debt and will be in trouble when interest rates rise. With rates at near all time, especially mortgage rates it has brought demand for big ticket items such as houses forward, meaning people looking to buy a house in the next year are rushing to get into the market now, and this will reduce activity in 2011.