...against fictions and other tall tales

Thursday, 18 August 2011

Consumer credit and spending continues to slow

The August edition of the Canadian Economic Observer is out. For many months now, my eye has been fixed on the declining growth in consumer credit and household expenditures. This is a clear sign that households are accumulating less debt.

Growth in business investment is also slowing, but its current level is from a historical standpoint still very high. No doubt the strength of the Canadian dollar is helping firms update their machinery and equipment.

On the bright side, government expenditures have turned up a tad after several months of decline. Also, capacity utilization rates are continuing their upward trend.

Finally, no sign that Canada's current account balance will improve any time soon (see here for more on export potential and Canada's sectoral balances).


  1. @household credit & exp. may not be a bad adjustment at this time;
    @investment in m&e is tepid. These days reflects more employment cuts and flatlines on labor. Macro returns are difficult to assess immediately;fyi check Bernanke, fed statement few mths back
    @c/a watch for the squall in 6 mths.

  2. I'm with you, especially on household credit. I'm pointing it out as a sign of things to come. IMO, it was the component that boosted the econ (with govt spending) during the last 2-3 years. With the feds moving forward with cuts in earnest, declining sales, strong CAD, I see very little positives moving forward.

  3. Swells (nod)on the M&E. Same trend as in the US. Feel a surge in 49n125w yet. ???