Debt servicing costs to reach record level say economists.
Canada’s household debt problem is getting worse.
Debt servicing costs are projected to hit a record level, exceeding 15% of disposable income by the year 2020 according to a note by economists reported by Bloomberg. The previous record was in 2007, as the global financial crisis was heating up.
According to the note, “Consumers may be able to lower their bills by taking steps such as stretching out the amortization period of their mortgages. “No matter which scenario you look at, one thing remains in common: debt service costs will likely outpace income growth over the next couple of years, squeezing consumer spending,” the economists wrote.”
That line is the key issue here: “Debt service costs will likely outpace income growth over the next couple of years, squeezing consumer spending.”
That means people will – in real terms – be getting poorer. And that totally flies in the face of all the over-hyped rhetoric trying to convince people the economy is somehow doing well.
The note also points out that the increase in debt servicing spending will cost Canadian households between $400 and $700.
Of course, this debt problem is why Canada needs massive tax cuts, and the scrapping of the carbon tax. With interest rates rising, Canadians need more money in their pockets, and big tax cuts for middle class and working class Canadians would help mitigate the economic damage from higher interest rates.
Canadian businesses also need tax cuts and regulation cuts – which would boost their ability to expand, attract investment, and hire more people at higher wages.
But instead, the Trudeau Liberals are doing the opposite, imposing a carbon tax and regulations that will slow down the economy, take more money out of our pockets, and damage our economy even further.
It’s a recipe for disaster.