Consumers are shifting their spending as higher gasoline and food prices strain family budgets, leaving less money for discretionary items such as trips and clothes.
Households will face even tougher spending choices in the months ahead as an expected hike in interest rates takes yet another bite out of their finances.
With Canadians already grappling with record household debt, higher energy and food prices are expected to curb spending in some areas, as well as reduce overall economic growth since consumer spending accounts for 60 per cent of the economy.And many consumers can also look forward to higher than average monthly housing costs, even with ultra low interest rates.
Home equity considered forced savings for young people"
“Buying a home can really be considered somewhat of a forced saving plan with a portion of each mortgage payment you make going towards principal and that builds equity in the property and increases your net worth,” says Campbell. “Over time with the equity building, when it comes time to eventually sell the property, you’ve actually got money in your pocket from the purchase. When you rent, all the money you pay goes to the landlord and you end up deriving zero benefit from this.”If home equity is the only savings young people can do, we are in trouble as the average debt a University grad has is over $30,000. A correction in the housing market would wipe up many young persons " forced savings". To say that renting from a landlord is zero benefit is bunk as we need a place to live. But I do agree that a home can be considered somewhat a forced savings plan. With that comment I leave it with Irvine:
From Irvine Housing Blog " The US needs a home equity lock box owners can not raid"
The advantage of owning a home was the amortizing mortgage was a forced savings account, and inflation provided some additional return. Once we gave unfettered access to home equity, these features of home ownership no longer applied. As many Ponzis have proven, even after more than 20 years of ownership, a loan owner can lose their home to foreclosure.
That's were the lockbox comes in. If a house is supposed to represent financial security, it should be a place of money storage, not an endless ATM machine spitting out spending money.Don't think Canadians have borrowed beyond their means? Canada is now near 150% of debt to income. More than those reckless Americans.