How we spend
Canadians are already asking themselves this question based on anecdotal evidence, levels of outstanding debt and monthly sales results.
But a handful of recent reports begs asking it again: Are we spending beyond our means on everything from real estate to telecom-entertainment packages?
Housing, of course, depends on where you live. And in particular, whether it’s Toronto or Vancouver, where home prices are rising seemingly by the minute, and where your eyes pop when you hear what some people are spending.
As in, that house down the street went for how much?
The average price of a single family home in Toronto recently topped $1-million, while Vancouver saw that some time ago, and already swollen household debt levels have been rising.
“Solid price increases continued to erode housing affordability in the Toronto-area market,” Royal Bank of Canada chief economist Craig Wright and senior economist Robert Hogue said in their most recent look at the market.
“Strong price gains for single-detached homes also squeezed already poor affordability in the Vancouver area, although there was some reprieve in the condo segment, where prices inched a little lower,” they added.
“Both Toronto and Vancouver have been Canada’s housing ‘hot spots’ so far this year despite broadly deteriorating affordability trends.”
So that’s housing. Cars are another big-ticket item, and prices have been relatively steady. (Then there are all those other things, like weddings and our children’s education.)
And then there’s communications and entertainment, everything from wireless devices to Internet hookups to TV packages.
In a report this week, the Conference Board of Canada noted the hike in prices in the wake of the Canadian Radio-television and Telecommunications Commission’s new wireless code in late 2013.
“The overall telecommunications price index rose by almost 5 per cent in 2014, most likely driven by price increases in the wireless segment,” it said.
When you dig deeper, you find that we spent 8 per cent more on telecom services in the last quarter of 2014, compared to a year earlier, largely because of prices, not consumption.
“As such, when we look at the actual volume of services households consumed, through removing the effects of price fluctuations, we see that growth in spending on telecom services slowed markedly in 2014, with increases below 2 per cent,” the group said.
“This is an indication that consumers have likely responded to the significant increase in wireless prices by reducing their consumption of other types of telecom services, such as paid-TV and wireless phone services.”
Just today, Bank of Montreal released a survey showing that 64 per cent of indebted Canadians would be “stressed” if interest rates climbed by two percentage points.
“The sizeable number of indebted households that would feel very strained by a relatively moderate increase in interest rates is concerning,” senior economist Sal Guatieri said in the report, which showed average household debt at $92,699 and monthly debt service costs at $1.165.
Having said that, the number of Canadians who would feel “some stress” is lower than in the past two years.
A comment I'd love to hear
“Stop it. My cellphone bill's high enough already.”
Canada loses jobs
Canada’s unemployment rate is holding stubbornly at 6.8 per cent, with a loss of 6,400 jobs in June.
But that’s better than some economists had feared, forecasting the jobless rate could edge up to 6.9 per cent.
As The Globe and Mail’s Tavia Grant reports, June’s job losses followed a surge in May, and had been expected.
Dig deeper, and you still find huge fluctuations in the makeup of the market.
According to Statistics Canada, the economy churned out almost 65,000 full-time jobs, offset by the loss of part-time positions.
The public sector gained jobs, the agency said, while the private sector registered little change.
“The one negative was that public sector employment surged by 42,000, meaning that the private sector, a better indicator of the business cycle, was shedding jobs again,” said chief economist Avery Shenfeld of CIBC World Markets.
“It’s hard to see the trend of strong public-sector job creation continuing given the message of restraint at the provincial level.”
Chart of the day
Is it real this time?
Greek Prime Minister Alexis Tsipras didn’t mean it, of course, but he actually couldn’t have said it better as he ended his letter to creditors: “Thanking you for our co-operation.”
It was a mistake, obviously, something no doubt translated improperly.
But it really does tell the tale of how Athens has moved from a resounding ‘No’ vote in its referendum on creditor demands to what is seen by many as a climbdown from its hard stance for better terms.
The letter from Mr. Tsipras came with an attached new proposal to the European Commission, the European Central Bank and the International Monetary Fund before a crucial weekend euro zone summit on new money for Greece.
As our European bureau chief Eric Reguly reports, Mr. Tsipras is taking to parliament a proposal that’s similar to the creditor demands the Greek people rejected.
“Greece has finally decided to table a proposal to its creditors and agreed to the majority of their demands but has asked for €35.5-billion in return,” said IG market analyst Alastair McCaig.
“There still remains the tricky issue of the Greek parliament approving this proposal, which was by and large rejected in a national referendum less than a week ago,” he added.
“Assuming that the Greeks can all agree with themselves, we would then need to see the creditors approve this proposal over the weekend.”
Word of the day
Temporary relief. China got some, Greece hasn't.
Quote of the day
“The newly launched Manure Knowledge Kiosk offers resources, knowledge and connections to support improved manure management.”
Wageningen UR Livestock Research