Last week, I read an article on Bloomberg.ca that reported Canadians' pessimism about their financial status in today’s economy. The article described a report about the latest MNP Consumer Debt Index. I was not surprised that Canadians are having trouble, considering the battering that the Canadian and world economies have gone through since the COVID outbreak three and a half years ago, in the spring of 2020. And the wars in both Ukraine and Gaza are also going to have an ongoing impact, as well.
Many of the details were still quite shocking
While the causes of this economic crisis are well documented, their impact has never been seen before on the Debt Index. The story in Bloomberg states, “The report shows Canadians are the most pessimistic about their financial situation than they’ve been in the five-year history of the survey.”
I think we can call this depressing but not surprising.
For instance, more than half of Canadians report that they are “$200 away or less from not being able to meet all their financial obligations,” while many of the people answering the survey said that they are worse off than they were one year (20%) and five years (25%) ago. And even higher numbers don’t see the potential for any kind of improvement in the next five years (35%).
Credit card debts grow in this difficult economy
The article goes on to describe a recent report from Equifax Canada that describes the high levels of credit card and overall consumer debt in Canada right now. “(C)redit card balances hit an all-time high of $107.4 billion as total Canadian consumer debt reached $2.4 trillion.”
Equifax referred to this as “a sign financial stress continued to build in the face of inflation and rising interest rates”. Are we surprised?
But where does it end?
Well, it’s easy (I use that term loosely) to describe how things are right now. We can all see the impact that inflation and high interest rates are having on the Canadian economy. It’s obvious every time any of us walks into the supermarket. And it gets really scary if you have to think about renegotiating your mortgage.
But the causes of these conditions, like recurring COVID outbreaks, the ongoing war in Ukraine, and now the conflict in Gaza, are still there.
At the same time, we’ve been here before
As scary as things are for so many Canadians, this is not the first time that world events have had an impact on economic and business cycles. After all, this is actually why they call them cycles, right?
For those of us who remember that far back, we witnessed the Gulf War and war in Croatia and Bosnia. And how about 9/11? To top it off, this is not the first time Israel and its neighbours have been at war.
And if we go back a bit further, North America had even higher interests during the ‘80s.
This is why it is important to set your investment timeline to handle these bumps in the road and get past them.
Even so, times like these often need a closer examination of your financial situation. If you want my help looking at things over, reach out to me at (519) 279-0186 or email me at [email protected]. You don’t need to go through this alone.
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