Monday, September 16, 2013

Andrew Coyne: Canadians aren’t getting the whole story on the economy


Excellent read here about the true story of the Canadian household debt and net worth.  Interesting stuff indeed!

Have you heard this headline in the news?  "CANADIANS ARE TWICE AS WEALTHY, AFTER INFLATION, AS THEY WERE TWENTY YEARS AGO"

I have not, I see many more head lines like, "CANADIAN HOUSEHOLD DEBT-TO-INCOME RATIO HITS RECORD HIGH".

Another interesting tidbit to take away ....
Of course, even if your assets exceed your debts, you still have to make the payments. But here again, debt-to-income doesn’t tell the whole story. You also need to know what interest rate you’re paying on the debt: it’s the combination of the two that dictates how much you pay every month. These figures, too, are readily available: the Bank of Canada calculates a “housing affordability index,” measuring mortgage payments, principal and interest combined, against disposable income. What does it show? At a ratio of less than 26% (as of the first quarter of this year) it is lower than it has been at virtually any time over the last 30 years — half what it was in the early 1990s, a third of its level in the early 1980s. But no, you haven’t read that anywhere, either, have you?

Is youth unemployment the issue we are facing?
Elsewhere I’ve pointed out that, contrary to everything you’ve read lately, poverty is declining in Canada, median incomes are rising, while inequality is steady or even falling. Again: these figures are easily available. But the same applies to a range of other data. How many stories have you read about youth unemployment (“Canada’s Youth Face Job Crunch” ), now at 14%? How many told you that that is in fact rather lower than it’s been at most times in the last 40 years?

Fascinating stuff and a good read to boot - Please click here to read Andrew Coyne's complete article

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