Canadian Household Debt, GDP, Foreign Direct Investment and Balance of Trade and a Google Search Mexican Peso & Canadian Dollar Below
DEBT data are book value quarterly; GDP data are seasonally adjusted at annual rates; FDI FDO data are annual; NET TRADE data are seasonally adjusted monthly.
CANADIAN HOUSEHOLD DEBT TO INCOME RATIO HITS A NEW RECORD HIGH at 167% in 3Q 2016
Reuters, December 14, 2016:
OTTAWA (Reuters) - Canadian household debt as a share of income hit another record in the third quarter as the pace of borrowing outstripped wage gains, Statistics Canada showed on Wednesday.
The ratio of debt to disposable income rose to 166.9 percent from an adjusted 166.4 percent in the second quarter. That meant Canadians owed C$1.67 for every dollar of disposable income they had.
The Bank of Canada has flagged the high level of debt as a potential vulnerability for the financial system and is expected to update its view in a report on Thursday.
Years of low interest rates since the financial crisis, as well as rising home prices, have encouraged Canadians to take on more and more debt.
Household credit market debt, which includes consumer credit, mortgages and non-mortgage loans, rose 1.3 percent to C$2.005 billion from C$1.98 billion in the second quarter. Mortgages made up the bulk of the total, standing at C$1.31 billion, while consumer credit was C$590 billion.
Disposable income increased by just 1 percent.
Economists expect tighter mortgage rules announced by the government in October to help rein in excessive borrowing. There have also been signs that families are saving at least part of the child benefit checks that the government began mailing in July.
Reporting by Leah Schnurr; Editing by Lisa Von Ahn
Clearly the post 2008 credit crash period and our monetary policy coming out of it has led not only to a furious bid in real estate assets with all its consequences of draining disposable income, but the gap between mortgage debt and other household debt remains high and wide relative to pre-crash times.
The other features of the chart show that in the decade before the crash as the commodity boom began to peak, our Foreign Direct Investment account flipped poles so that more Canadian capital was being invested offshore than offshore capital was being invested in Canada. Coming out of the March 2009 Pit of Gloom with monetary policy firmly presiding over state suppression of market interest rates, the shift in polarity in the FDI needs no reason to flip back to the 1980's and '90's when more offshore investment capital came into Canada than capital leaving Canada.
Cheap capital is in search of cheap productive Labour in an effort to realize a better return on investment from exploiting the price mismatch. Clearly this is working as our deeply negative Balance of Trade data suggest; we buy more than we sell, hence we supply net income to entities outside our "borders" financed and subsidized by our own cheap credit and our willingness to hock the future.
StatsCan April 2016 NOTES on 2015 FDI-FDO
SNIPPIT: "Increase in Canadian direct investment abroad focused in the United States. The U.S. accounted for almost two-thirds of the increase in Canadian direct investment abroad in 2015, as the investment position in that country rose 31.0% to $448.5 billion. As a result, the U.S.' share of total Canadian direct investment abroad increased from 41.5% in 2014 to 44.6% in 2015."
StatsCan 2015 Data: Product Trade and Investment
Canadian exports to Mexico: $6,591,945,871
Canadian imports from Mexico: $31,199,871,938 (4.7 times)
FDI into Canada from Mexico: $1,422 million
FDI into Mexico from Canada: $14,816 million (10.4 times)
CME 2012 Data: Canada is the fifth largest investor in Mexico. Currently, more than 3,000 companies in Mexico operate with Canadian capital. There are an estimated 2,500 Canadian affiliates based out of Mexico, the largest ones being Goldcorp, Bombardier and Scotiabank.