According to a study released by Harris/Decima online this past Tuesday, we’ll be spending a lot less than our fellow Canadians will this year; $814 vs. the national average of $891. And when it comes to spending on gifts, only British Colombians will spend less, $547 vs. the $551 for Quebeckers. Although all Canadians are feeling the pinch this year, we seem to be feeling it a little more.
Quebeckers are definitely weighed down by the burden of accumulated debt from years past. Although, the year over year change in the bankruptcy rate increased marginally to 22% in 2009 and remained below the Canadian average of 31.9%, it still is quite high. Our collective financial situation hasn’t improved much since the end of 2008, as insolvent Quebeckers accounted for a disproportionate 29% of all Canadian consumer bankruptcies (34,276). The 3.6 bankruptcy rate per thousand inhabitants ranked only behind the Maritimes (4.4) and Ontario (3.9). (Industry Canada) This might explain our hesitancy to spend." As bad as the recession was in the early 1990s, today's bankruptcy picture is shaping up to be worse, even when properly adjusted for growth over the years, " Mr. Derek Holt of Scotia Bank Capital said in a recent statement.
Another key factor affecting holiday spending is that a dollar just doesn’t go as far as it used to. Higher prices at the pump were partly responsible for inflation rising by 1.7% in the last 12 months, amongst the highest increases in the country. (Statistics Canada) The price of gas is a main cost component for all of the products we consume, so it’s no surprise that increases in the inflation rate were recorded for 6 of the 7 components of the Consumer Price Index. That last minute gift just got a little more expensive.
Although the Canadian economy created 79,000 jobs in November, only 39,000 were full-time jobs. But don’t let those strong numbers fool you. Unemployment remains at 8.5%, much higher than the 5.8% average unployment rate recorded in 2007. Historically, service jobs are lower paying when compared to manufacturing jobs.
The Bank of Canada has been telling us that an economic recovery will become “solidly entrenched” in the short term. Maybe our monetary policy Santa can leave us something extra in our Christmas stocking this year.