Concerns about Canadian household debt overblown: study
Posted Jul 18, 2017 6:56 am.
This article is more than 5 years old.
There have been growing concerns about household debt in Canada, especially in Alberta, but a new study from the Fraser Institute suggests those fears may be overblown.
It points to growing government debt as the real issue.
Report author Livio Di Matteo explained even though household debt is on the rise, so are assets.
“In 1990, households had just over $2-trillion in assets and today they have about $12-trillion, so, the net worth has actually gone up from $1.8 to $10.3-trillion,” he said.
As a share of GDP, that’s actually almost twice as much.
Di Matteo argued the concern with governments is that even with financial, property and other assets, their net worths have been decreasing as officials take on more debt.
“Once you take away the total value of assets, the net worth is actually close to zero and sometimes negative,” he said. “So government does not have that cushion of assets that households would have in terms of net worth.”
Without plans to balance the budget, Di Matteo said any government criticism of Canadian household debt is hypocritical.
