Statistics show Canadians are spending like it’s a boom time. But experts are worried that will soon bust.
“I think we're sitting on a time bomb,” said economist Andrea Guisto.
Recent job numbers show things are looking good in this country, with 54,000 new full-time jobs being added in August.
But with an unemployment rate of seven per cent and the highest borrowing rate in two years and two consecutive quarters with negative GDP growth, Canada has landed in a technical recession.
“A technical recession means that the latest number points to a decrease in real GDP,” said Guisto. “It’s called technical because the numbers aren’t final.”
Guisto says those numbers won’t be final for another five years.
But that hasn’t affected spending. RBC found Canadian households racked up more than a trillion dollars in debt as of June.
“Households are at 120 per cent or more of debt to income and that’s more than the Americans had at the height of their 2008 crisis,” said Guisto. “So that’s very dangerous.”
Stats Canada says most of the money is spent on cars. But in Halifax, buyers aren’t shying away from other big ticket items.
“A lot of my colleagues and myself are having a great year,” said real estate agent Cheryl McCarron. “A lot of us are having the best year in like five years or so.”
While Canada may technically be in a recession, Halifax residents say they won’t be changing anything.
“This year I feel like we're doing so much better than the previous years,” said Maria Gillighan with Amos Pewster. “Better than the years before. I haven’t noticed a recession at all.”
Economists worry the bust will catch up with this spending boom.
“People perceive that their income has not gone down,” said Guisto. “This is one of the ongoing conundrums in economics-- why people don’t pay attention to statistics.”
Guisto says the best case scenario is for the price of oil to go up and diversify the economy.
With files from CTV Atlantic’s Kelly Linehan.
