Back in the pre-crisis days the US consumer was legendary for his willingness to spend and take on debt while the prudent Canadian was saving money in case of trouble.
No longer.
US spending has flat-lined and a Statistics Canada report today show the country’s household debt-to-income ratio at a record high. The Bank of Canada has consistently fretted about the ratio and prematurely declared victory after declines in the prior two quarters.
Today, debt surged 1.5 percentage points to 163.4% from 162.1%, blowing away the record from Q3 2012 of 162.8%. One caveat may have been Canadian rushing to borrow before rates went up and mortgage rules changed. In any case, watch this closely because the Bank of Canada will not be pleased and could issue a hawkish warning.
