After a report was released by Statistics Canada last week announcing that our incomes are stagnating, people once again began to panic. What impact would this have on our Vancouver and Ottawa mortgages? Will we still be able to pay them? And what about all those warnings about debt? What effect will stagnating incomes have on that? But while the news shouldn’t have consumers feeling as though they need to pull out of the economy altogether and hang onto every penny we make; the fact remains that yes, this new data certainly does show that there are reasons for concern.
According to Wendy Pyper, analyst at Statistics Canada, the average after-tax income in Canada for families of two or more was $65,500 in 2010. This is the same figure the data showed in both 2009 and 2008, when taking inflation into account. And while some Canadians may be taking heart that this is still better than where incomes sat in the United States before their crash, Benjamin Tal of CIBC World Markets says this just isn’t good enough.
“Something is not working here, this is not a positive report,” Tal said. “Whenever we want to feel good we compare ourselves to the U.S. This is not good enough given where we are and given the nature of our economy, namely that we export commodities that the rest of the world is buying.”
But weren’t we taking out just as many second mortgages and throwing away just as much in those 2 years as we are today, even with the same income levels? And if we made it through those years okay, why are we panicking now?
Because, Jeffrey Schwartz says, even if it didn’t catch up to is in 2009 or 2010, it’s going to eventually. “It’s going to be even more of a problem if they continue these behaviours if their incomes are not rising,” he says. “If we see everything else go up in price, then they’re going to have trouble affording much of anything. It’s really important for Canadians to get their spending in order and reduce their debt.”
The Stats Can report also showed that two-parent families had incomes that were slightly better than the national average, increasing to $78,800 from the $77,200 they sat last year.
Ontario fared as the third-best province when it comes to average incomes, sitting at $69,300. The only two provinces that beat Ontario on the scale were Alberta, at $78,100; and Saskatchewan, at $70,100.
