The Current State of Canadian Family Finances 2003 Report

Author

Roger Sauvé, People Patterns Consulting

Organization

The Vanier Institute of the Family

Published

2004

Summary

For far too many, the "edge" is getting closer and closer and a growing number will fall over the precipice when, and not if, interest rates begin to rise from their 40-year lows. According to Roger Sauvé, the author of the report, "Households need to reign-in some of their spending, pay off some debt and build a bigger cushion against slow times … and the time to act is now."

For some time now, we have counted on Canadians, as consumers, to sustain the overall performance of the Canadian economy. For families, this economic growth has come at a high price. As the report clearly shows, most of us are now "spent-out" and many of us are already over-extended. Can consumers step back from the edge of the precipice of "over-spending" and still look forward to economic growth? That is the question that faces us all.

The degree of this massive "over-spending" is visually shocking as shown in Chart 4 of the report. Over the 1989 to 2003 period, real disposable incomes per household advanced by a very modest 2.9%, real spending grew by 17.4% and debt soared by 34.8%. This pattern is, quite simply, not sustainable.

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Source: Consumer Policy Research Database