July 9, 2024 | Household Debt in Canada Exceeds 100% of GDP

World leaders spend recklessly with no regard for the overall economy. Canadian Prime Minister Justin Trudeau has fallen out of favor for one primary reason – the cost of living is too high. Canada is deeply indebted, and now ranks the third-highest nation in household debt in the world.

Switzerland and Australia are the only nations exceeding Canada’s debt levels. Government debt has SOARED in recent years, now exceeding C$1,139.98. This figure was only C$721.36 billion in 2020 before Trudeau used the pandemic as an excuse to bulk up social programs.

As for household debt, that figure exceeded 100% of GDP by the end of 2023. The debt-to-income ratio reached 178.22% by Q4 2023, but that was the LOWEST on record compared to the past nine quarters. Household debt as a percentage of the overall GDP reached 103.54% in Q4, also slightly down from prior quarters. During the pandemic lockdowns in Q3 of 2022, this figure peaked at 184.52%.

The United States, also in dire conditions, reached 75% of household debt in relation to GDP. This means that Canadian families are deeply in debt and unable to spend or contribute to economic growth.

The housing crisis in Canada is a major contributing factor, with two-third of the total debt going solely to mortgages. No one was prepared for the rise in rates, which went from 0.25% in March 2022 to 5% in July 2023 before slightly dropping to 4.75% last month.

And yet, Trudeau speaks of finding more aid to fund foreign wars and support the millions of migrants that have entered Canada. He speaks of raising taxes and increasing spending through social programs and green initiatives, but nothing meaningful is being done to address Canada’s debt crisis.

Martin Armstrong July 9th, 2024

Posted In: Armstrong Economics

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