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According to credit monitoring agency Equifax this past week, the national 90-day-plus delinquency rate on consumer debt in the first quarter of this year was 1.12 per cent, up from 1.09 per cent in the fourth quarter of 2014. The observation came as Equifax reported that Canadians generally continued to increase their borrowings for car and instalment loans in the first quarter to bring the country’s total consumer debt to $1.544 trillion.
Although numbers such as those above are reported regularly by main stream media, such numbers prove intangible to the vast majority of readers and really mean nothing so let’s look at the numbers a little more tangibly.
Total consumer debt is 1.544 trillion that’s: $1,544,000,000,000 (12 zeros in a trillion)
1.12% of total consumer debt is delinquent 90 days plus. That’s $17,292,800,000 (17.2 billion)
17.2 billion; to put it in perspective is enough money to pretty much cover the annual provincial spending budgets of Nova Scotia, New Brunswick and PEI combined!
Delinquencies are up 0.03% over the previous quarter. That’s $463,200,000 (463 million).
463 million; to put it in perspective is the amount of money to pretty much cover the municipal operating budget of Strathcona County (a community of 100,000 residents where the writer is located) for almost 2 years (21.5 months to be exact). To make this optic even worse, the municipality is by no means grossly over taxed or fiscally mismanaged.
The intangible numbers that are thrown around are also most often followed up by silly and valueless observations and opinions such as:
- Low interest rates have been a key factor in Canadians accumulating record amounts of debt in recent years.
- While delinquency rates have remained low, some have raised concerns about what will happen once interest rates start to rise.
Such reporting is a symptom of our “don’t worry be happy, today is a good day – let’s kick the worry can down the road and worry about it when interest rates rise” attitude. NEWS FLASH: Rising interest rates? Don’t expect that any time in our lifetimes, or our children’s lifetimes for that matter!
How can interest rates ever be expected to rise with global public (government) debt at 56 trillion and counting? What nation on earth is in a position to allow interest rates to rise? No one can afford to let that happen. As a matter of fact total government debt in Canada is 1.7 trillion while in the US it’s a whopping 15 trillion at the time of writing!
Check out this link for the real time global debt clock: http://www.economist.com/content/global_debt_clock
In retrospect, do Canadians really have a borrowing and spending problem? I guess it all depends on who’s reporting it and how you read it.