Canadians are burning through their savings, to a point where Americans are now bigger spendthrifts than their northern neighbours.
The Canadian personal savings rate sunk to 4 per cent in the fourth quarter of last year, Statistics Canada figures showed Monday.
In a flip of historical trends, Canada's savings rate averaged 4.4 per cent last year, much lower than the 5.8-per-cent rate among Americans, according to BMO Nesbitt Burns.
It's the second year in a row that Canada's personal savings rate was more than a percentage point lower than the U.S. rate, with the widest gap in the U.S.'s favour since the early 1970s, it said.
"Indeed, for most of the past 40 years, Canada's savings rate has been higher than the U.S. rate," the bank says. "Not true any longer."
It doesn't think that gap will disappear until next year.
The shrinking savings rate -- and record household debt levels -- are a worry because they leave little cushion against sudden economic shocks, like a health problem or a job loss. It also makes Canadian households vulnerable to rising interest rates -- which are expected to start climbing by this summer.
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