Family Debt Soars
The debt carried by the average Canadian household has hit $100,000, up about 78% from two decades ago, according to an annual report by the Vanier Institute of the Family.
The debt-to-income ratio stands at a record 150%, meaning that for every $1,000 in after-tax income, Canadian families owe an average of $1,500. As the debt ratio has climbed, the savings rate has fallen. In 1990, Canadian families managed to put away an average of $8,000 each, a savings rate of 13.0%. In 2010, that savings rate was down to 4.2%, averaging only $2,500 per household.
"Even though standard economic indicators tell us the recession is technically over, the confidence Canadian families have in their economic and financial situation is shaky,” said Katherine Scott, the institute's director of programs. “As governments at all levels craft their budgets for the coming year and look at cutting programs to reduce their deficits, they need to be mindful that the state of Canadian family finances continues to be fragile in many households."
The institute said the number of households which have fallen behind three months or more in their mortgage payments rose to 17,400 in the fall of 2010, up nearly 50% since the recession began.
Credit card delinquency and bankruptcy rates also remained higher than pre-recessionary levels.
The institute also warned that official job figures, showing
has recouped all of the positions it lost during the recession, may not be giving the full picture. Canada
Roger Suave, author of the report, said those who lost their jobs are often not the ones who are landing the new positions. While those who do find employment may be paid less than they were in their prior job.
The types of jobs being created have also changed, with most new positions in the service sector and the manufacturing industry still struggling and not yet in a position to hire.
In particular, families with younger members preparing to enter the workforce face tremendous pressure. Only 5% of the new jobs created since mid 2009 went to the 15-24 age group.