While that’s still an increase, it’s down from the 5.6-per-cent pace of March, 2012, said economist David Onyett-Jeffries.
Canadian policy makers, such as Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney, have been pleading with consumers to pull back on their record debt levels.
Mr. Carney went so far as to signal an increase in interest rates to make that happen, though he has since pulled back on that warning as debt growth slowed.
“Household debt growth holding steady at the previous month’s more than decade-low rate reflected both mortgage and non-mortgage debt growth remaining unchanged from February, registering annual increases of 5.3 per cent and 2.5 per cent, respectively,” Mr. Onyett-Jeffries said.
“The year-over-year increase in mortgage debt outstanding in the first quarter as a whole does, however, represent the sixth quarter of moderation and the slowest year-over-year growth rate since the fourth quarter of 2001.”
The annual pace of growth in non-mortgage debt, such as credit cards and lines of credit, was at its lowest in the first quarter of the year since late 1993.
Canada’s housing market has cooled since last summer, when Mr. Flaherty brought in another round of mortgage restrictions to stop any bubble from bursting.
The Bank of Canada expects the key measure of household debt to disposable income to stabilize around its current record of 165 per cent.
“The indications of a further moderation in housing market activity support our view that demand for housing, and consequently demand for mortgages, will weaken slightly throughout 2013 as the Canadian housing market continues to transition to lower, more sustainable levels,” the RBC economist said in his report.
What makes us happy
It turns out money actually can buy happiness.
Two prominent U.S. economists have found that our sense of happiness, or well-being, rises with income.
That may not seem surprising to some people, but the study by Betsey Stevenson and Justin Wolfers dispels the long-held belief that money doesn’t buy more happiness after a certain income level is reached.
It’s what is known as the Easterlin Paradox, named for Richard Easterlin who in the early 1970s found that higher income doesn’t equate to being happier.
“However, in recent years new and more comprehensive data has allowed for greater testing of Easterlin’s claim,” Ms. Stevenson and Mr. Wolfers write in a study for the American Economic Review, Papers and Proceedings.
“Studies by us and others have pointed to a robust positive relationship between well-being and income across countries and over time.”
Ms. Stevenson and Mr. Wolfers, by the way, are a well-known couple in economic circles, both at the University of Michigan.
They cite earlier studies that claimed that happiness doesn’t rise once a certain level of income is reached, and that level bounces around depending on the research.
They’ve done a thorough economic study too deep to go into here, but here's the bottom line:
"We find no evidence of a satiation point. The income-well-being link that one finds when examining only the poor, is similar to that found when examining only the rich. We show that this finding is robust across a variety of datasets, for various measures of subjective well-being, at various thresholds, and that it holds in roughly equal measure when making cross-national comparisons between rich and poor countries as when making comparisons between rich and poor people within a country."
Every dollar more brings a "greater increment to measured happiness" for both poor and rich, with "no satiation point," according to the study published by Brookings.
“While the idea that there is some critical level of income beyond which income no longer impacts well-being is intuitively appealing, it is at odds with the data.”
- Read the study
- David Parkinson's Economy Lab: In the U.S., wealth and whiteness increasingly go together
Consumer confidence dips
Along those lines, many of us clearly aren’t raking it in, or are worried that it won’t keep coming.
The Conference Board of Canada’s consumer confidence reading slipped 4.9 points in April, the group said today, continuing a “disconcerting trend” of six dips over seven months.
Confidence picked up in the western provinces, but fell in central and eastern Canada.
“On a national basis, consumers continue to exhibit a considerable amount of trepidation with respect to their finances, and they were much more pessimistic about future job creation in their communities,” the Conference Board said.
Economy grows 0.3 per cent
Chalk up Canada's economic gains in February to its resource industries. And hockey.
The resource sector helped boost economic growth by 0.3 per cent in February, matching January's pace, which was revised up, Statistics Canada said today.
The main drivers behind the rise in gross domestic product were mining, quarrying, and getting oil and gas out of the ground. Those areas expanded by 2.2 per cent, marking the fifth monthly rise.
Output in manufacturing and construction also rose, by 0.8 per cent and 0.2 per cent, respectively.
Real estate agents and brokers suffered a setback, of 0.8 per cent, which isn't surprising given the speed at which Canada's real estate market has cooled.
And, yes, the return of hockey after the lockout helped buoy the arts and entertainment sector, by 3.3 per cent.
“Finally there’s something to cheer about in the Canadian economy, with growth picking up in the first quarter, and in the cyclical industries where such a turn is more meaningful,” said chief economist Avery Shenfeld of CIBC World Markets.
“Overall, a ray of sunshine in an economy that needs all it can get, putting Q1 on track for a 2-per-cent pace over all, although one helped by the comparison to a very disappointing second half last year,” he added.
- Canadian economy gathers speed in February
- Economy Lab: Why we love hockey - It helps the economy grow
Business fears government changes
The Canadian government's changes to its temporary worker program have sparked concern that red tape will lead to missed business opportunities, The Globe and Mail's Tavia Grant and Bertrand Marotte report.
The worry among some employers and immigration experts is that delays and difficulties bringing in workers along with higher costs will hamper the ability of firms to fill positions, particularly in areas where workers are hard to find such as remote locations in the Prairies. That in turn will stunt the ability for businesses to grow, which could eventually jeopardize Canadian jobs, they say.
The government reversed course on its expanded temporary worker program yesterday, announcing it will suspend the accelerated labour market opinion, which had sped up the process of bringing in workers, crack down on abuses, add a fee and end the 15-per-cent wage rule, which allowed employers to pay foreign workers less than the average under some circumstances.
Will ECB cut rates?
Inflation is tame and unemployment is rising in the embattled euro zone, so what’s to consider?
All of which is prompting further speculation that the European Central Bank will cut interest rates at its next meeting Thursday.
Inflation in the euro zone is believed to have slipped to just 1.2 per in April, according to the Eurostat agency today, down from 1.7 per cent in March.
Unemployment in the 17-member monetary union, on the other hand, climbed to 12.1 per cent in March from 12 per cent in April, with some countries suffering intolerable levels.
The statistics agency now estimates that 19.2 million people in the euro zone, and 26.5 million in the wider 27-nation European Union, can’t find work.
Greece, Spain and Portugal are struggling under the highest jobless rates in the euro zone, at 27.2 per cent, 26.7 per cent and 17.5 per cent, respectively.
Austria, Germany and Luxembourg enjoy the lowest, at 4.7 per cent, 5.4 per cent and 5.7 per cent.
Jobless levels among young people are particularly harsh, at 24 per cent in the euro zone and just shy of that in the wider EU.
More than 59 per cent of the youth work force in Greece is unemployed, and almost 56 per cent in Spain.
"At the last count, 12 of 39 economists surveyed by Bloomberg expect a 25-basis-point cut," Kit Juckes, the chief of foreign exchange at Société Générale, said of the anticipation for a rate decrease by the ECB Thursday.
"Far more expect 'something.' At least one person on twitter has suggested a 50-basis-point move. Market rates have fallen sharply, peripheral spreads have tightened, credit spreads ditto. The market is bulled-up and hoping for something, then! The risk of disappointment is severe."
- Sharp euro zone inflation fall, joblessness, point to ECB rate cut
- Italy's new PM rips up austerity plans
- ECB moves closer to rate cut as euro zone recession deepens
Suncor unveils big dividend hike
Shares of Suncor Energy Inc. climbed today after last night's announcement of a hefty dividend increase and robust share buyback.
The Canadian energy giant hiked its dividend by 54 per cent, to 20 cents from 13 cents, and said it planned a $2-billion share buyback, which chief executive officer Steve Williams "underscores our commitment to returning cash to shareholders and reflects our confidence in the company's future earnings and cash flow."
Suncor profit slipped in the first quarter to $1.1-billion or 72 cents a share from $1.4-billion or 93 cents a year earlier amid a $146-million after-tax foreign exchange loss, while operating earnings rose.
Streetwise (for subscribers)
- Why we love hockey: It helps the economy grow
- In the U.S., wealth and whiteness increasingly go together
ROB Insight (for subscribers)
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