Bloomberg: Canada's Getting Richer. Most Canadians Aren't.


mentalfloss
#1
Canada's Getting Richer. Most Canadians Aren't.

Canada's Conservative government has long made sound economic management the centerpiece of its claim to office. Now, with the country's outlook showing mixed signals and a federal election coming next year, I'm looking at ways to measure the health of the economy, and what each says about Canada's.

The last installment looked at the state of the labor market, and explained how raw numbers are probably the least useful metric. But in deciding whether a government has delivered good jobs, people's ability to find work is only half the story. The other half is how much money they're making.

When the Conservatives took office in 2006, the median family income was $47,600. In 2011, the latest year for which Statistics Canada has released figures, it was $47,700. (Both figures are in 2011 dollars.)



In other words, at the end of Stephen Harper’s first six years as prime minister, a household in the middle of the income distribution was pulling in $100 more than it did when he took office. In fact, 2011 median income was $1,600 lower than at its pre-recession peak in 2008.

Things have looked a little better for those at the top of the income distribution. In 2006, adjusted market income for the highest-earning 20 percent of Canadian families was $104,000; by 2011, that had increased 5 percent, to $109,200.



The change was less sunny for the bottom quintile of families, who saw their adjusted market income fall 6 percent over the same period, to $8,300 from $8,800.



Another important indicator on income is the share of Canadians earning the minimum wage. In a healthy economy, that share would be steady, or even falling. Instead, the portion of workers getting the adult minimum wage last year was 6.7 percent, a 50 percent jump over the level when the Conservatives took office.



One could argue that an increase in minimum-wage workers was to be expected during the recession. Indeed, the share started rising in 2009. But four years later, the portion of minimum-wage workers doesn't seem to be falling back to pre-recession levels.

As incomes stagnated, the cost of living rose, pushing households deeper into debt. In 2006, Canadian households had debt equal to 135 percent of their nominal disposable income, a figure roughly equal to U.S. households and about one-fifth lower than in the U.K.

By 2012, household debt had jumped to 165 percent of disposable income in Canada, while it fell to 111 percent in the U.S. and 152 percent in the U.K. In fact, of the countries for which the Organization for Economic Cooperation and Development reports these data for that year, Canada’s household debt levels were the highest for 2012, the latest for which figures are available.



Unsurprisingly, much of that increase came from larger mortgages, as housing costs have rocketed up and Canadians borrow more to pay those costs. Mortgage debt as a share of nominal disposable income rose from 82 percent in 2006 to 105 percent in 2012. In effect, Canada switched places with the U.S., where those figures moved in the opposite direction.



The government responded to those pressures in 2012, shrinking the maximum mortgage period for government-insured loans and reducing what people can borrow against their homes; the next election campaign is a good time to debate whether those steps were enough, and whether they came too late.

Canada's Getting Richer. Most Canadians Aren't. - Bloomberg View (external - login to view)
 
EagleSmack
+1
#2  Top Rated Post
Quote: Originally Posted by mentalflossView Post



This is a scary stat if accurate.
 
Locutus
+1
#3
Doesn't look too bad.

Household and mortgage debt ain't stevo's problem. Nobody forces anyone to buy a half million dollar home, trendy toys, gadgets or 2 cars. Not really.
 
petros
#4
Credit in the hands of a fool....
 
Locutus
#5
in fukking deed.
 
jjaycee98
Conservative
#6
Quote: Originally Posted by LocutusView Post

Doesn't look too bad.

Household and mortgage debt ain't stevo's problem. Nobody forces anyone to buy a half million dollar home, trendy toys, gadgets or 2 cars. Not really.

Nobody recommends that students remain "students" for as long as possible taking courses that lead to nowhere-or maybe a Welfare line.


Jobs go begging or go to immigrants and Foreign workers because Canadians do not want to do "that type of work."


People are unwilling to move "North" where the jobs are.


People who buy things they can not afford soon lose them.
 
mentalfloss
#7
Quote: Originally Posted by LocutusView Post

Doesn't look too bad.

Household and mortgage debt ain't stevo's problem. Nobody forces anyone to buy a half million dollar home, trendy toys, gadgets or 2 cars. Not really.

The market's bad for buyers to begin with so even 'low cost' houses now start pretty high. Then you run into a bidding war with no transparency and people have to settle.

I would imagine this might push up condo sales but there's not much choice for families.
 
Locutus
#8
Quote: Originally Posted by mentalflossView Post

The market's bad for buyers to begin with so even 'low cost' houses now start pretty high. Then you run into a bidding war with no transparency and people have to settle.

I would imagine this might push up condo sales but there's not much choice for families.

Again, it's not Harper's fault.
 
petros
#9
Condos are green, affordable and smell of ethnic foods.

Welcome to the New Canada.
 
mentalfloss
#10
Quote: Originally Posted by LocutusView Post

Again, it's not Harper's fault.

The government has an obligation to manage the economy so yes, they do have some responsibility. That's why they already reduced the mortgage period in 2012.

We're entering a period where there needs to be a balanced approach to fiscal matters.

Going full tilt to the right or left on money matters is what will fukk is all over.
Last edited by mentalfloss; Apr 2nd, 2014 at 12:11 PM..
 
Locutus
+1
#11
They do not have any responsibility to manage the house these idiots choose to go after. Any more than they manage the beemers or lexi the hipsters want to finance.

You wanna live beyond your means, have at 'er.
 
mentalfloss
#12
Quote: Originally Posted by LocutusView Post

They do not have any responsibility to manage the house these idiots choose to go after. Any more than they manage the beemers or lexi the hipsters want to finance.

You wanna live beyond your means, have at 'er.

If you are comfortable with families of four living in condos then I'm not complaining bro.

But for a government that prides itself on a strong economy - this is bad for the economy.
 
Locutus
#13
I don't care where the 'movin' on up' crowd live, just don't try and blame any government for their lack of square footage and by-choice monthly payments dude.
 
mentalfloss
+1
#14
When you hold interest rates low, you can expect a higher buy in, just as an example.

You can have your belief in personal freedom all you like, but there are deterministic factors in the economy that are real and need careful attention.

Also, part of the reason we survived 2008 was because of certain regulations in the banking sector that prevented people from making the same mistakes elsewhere.
 
EagleSmack
+1
#15
Quote: Originally Posted by mentalflossView Post

If you are comfortable with families of four living in condos then I'm not complaining bro.

But for a government that prides itself on a strong economy - this is bad for the economy.

I have an idea... make it a Right for everyone... every family... to own a house. A Right. Demand banks give loans regardless of credit history.

Sound good Barney?
 
Locutus
+1
#16
Quote: Originally Posted by mentalflossView Post

You can have your belief in personal freedom all you like, but there are deterministic factors in the economy that are real and need careful attention.


Everything after 'but' is generally bullsh!t eh.

Common sense personal financial decisions are very good examples of 'deterministic' factors.

Live large my friend.
 
EagleSmack
#17
Quote: Originally Posted by mentalflossView Post


Also, part of the reason we survived 2008 was because of certain regulations in the banking sector that prevented people from making the same mistakes elsewhere.

Yeah? Look at that chart you posted.
 
mentalfloss
#18
Quote: Originally Posted by EagleSmackView Post

I have an idea... make it a Right for everyone... every family... to own a house. A Right. Demand banks give loans regardless of credit history.

Sound good Barney?

Slippery slope.

Quote: Originally Posted by EagleSmackView Post

Yeah? Look at that chart you posted.

Canada pulled through much better than many other countries because our banks were under stricter regulation when giving out loans. Now banks are using the interest rate the same way loan sharks used lengthy mortgage terms to lure people in.
 
Trex
#19
Quote: Originally Posted by mentalflossView Post

When you hold interest rates low, you can expect a higher buy in. You can have your belief in personal freedom all you like, but there are deterministic factors in the economy that are real and need careful attention.

And when you push interest rates higher the first to get hurt are low income debt holders.
Is that what you want?
Perhaps a housing crash?

Most people understand that the Fed Cons are holding rates low to try and "prime the pump" business wise in Ontario.
Or would you prefer a sky high petrodollar?
Which policy would you advise us mentalfloss?

The Federal Conservatives have actually done a remarkably good job fiscally in these trouble times.
Canada's finances have been handled better than just about any other country on the planet.
And that is why the man who was running the Bank of Canada has now been tapped to help out the UK and its finances.

Harper has been lobbying for business investment (jobs) in Canada.
Harper has also been working hard for trade deals (more jobs) in Canada.
He is also cutting inflationary government spending back in order to reduce the debt load passed on to future generations.

I understand Harper is a cold and unpopular man.
I also understand that after about 10 years the Cons are getting well past their " best before" date as far as the electorate is concerned.

But what to do?
A stale and unpopular Harper and the Cons?

Or perhaps a change to Justin and the Libs?
Justin is good looking and popular.
He makes the ladies go all a tingle with just a wink and a smile.
He smokes dope and curses just like the regulars down at the local bar.
A career history of being a part time drama teacher.
No policies on unfolding world events.
No policies on running the country or stimulating the economy.
No policies on anything actually.
Just a promise of "change".

What to do?
 
mentalfloss
#20
Quote: Originally Posted by LocutusView Post

Everything after 'but' is generally bullsh!t eh.

Common sense personal financial decisions are very good examples of 'deterministic' factors.

Live large my friend.

You try and explain mortgages to the average person and you will find that it isn't common knowledge at all. If it were, then you wouldn't have so many people take on such huge debt.

Trex, I never said that interest rates are the only factor affecting the economy.

And there is nothing stopping existing government to manage the situation.

Conservatives are suppose to be the money experts led by a master economist so when the situation getting better, they need to do something about it.
 
petros
#21
Where do you buy a NEW single detached house with 1200 sq ft which is all a modern family needs?
 
Trex
#22
Quote: Originally Posted by petrosView Post

Where do you buy a NEW single detached house with 1200 sq ft which is all a modern family needs?

And that is a huge problem in Canada.
All a young family needs is between 900 and 1300sqft.
Zero lot lines with a small maintainable back yard.
Well insulated, low maintenence with low utility costs.

Those new subdivisions with 3000 sqft monsters should be banned.
Granite and stainless should be a flogging offence.

It's unsustainable otherwise.
 
Locutus
#23
Quote: Originally Posted by mentalflossView Post

You try and explain mortgages to the average person and you will find that it isn't common knowledge at all. If it were, then you wouldn't have so many people take on such huge debt.

Ain't the Prime Minister's problem dude.

Quote: Originally Posted by mentalflossView Post

Conservatives are suppose to be the money experts led by a master economist so when the situation getting better, they need to do something about it.

You sound...upset. Mortgage woes?

Budgeting For Homeowners class is just down the hall.
 
Tecumsehsbones
#24
Socialist propaganda.
 
mentalfloss
#25
Quote: Originally Posted by LocutusView Post

Ain't the Prime Minister's problem dude.

You sound...upset. Mortgage woes?

Budgeting For Homeowners class is just down the hall.


Are you saying the PM's campaign for a better economy is bullsht?

Because, whether you like it or not, this can actually lead to suppression of growth and job creation.

It really surprises me when people who call themselves money-minded, believe that the market just fixes itself and everything goes back to normal. History has shown time and time again that this mentality just leads to shyttier conditions.
 
Locutus
#26
Quote: Originally Posted by mentalflossView Post

Are you saying the PM's campaign for a better economy is bullsht?

Because, whether you like it or not, this can actually lead to suppression of growth and job creation.

No bub. How could I have?

Quote: Originally Posted by mentalflossView Post

You try and explain mortgages to the average person

...when I said this:

Quote: Originally Posted by LocutusView Post

Ain't the Prime Minister's problem dude.

Just read the black parts.


I'm saying the onus for learning about mortgages, magnets and how they work, is the buyer's responsibility. Dig?



Kids...sheesh.
 
mentalfloss
#27
You should change it from black to cherry red.
 
Locutus
#28
Hahahaha....man, you sound annoyed still. Did the bank turn you down? I'll talk to them if you like. Or maybe try Harold the Jewellery Buyer. He's doing mortgages now. We can get you on your feet soon enough.
 
mentalfloss
#29
My finances are doing just fine thanks.
 

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