Well, if the United States credit bubble is a yard stick, Canada measures up quite well. The United States credit bubble peaked at 97% of GDP.
From Bloomberg: How Household Debt Contributes To Unemployment
The weakness in household balance sheets and the associated pullback in spending are directly responsible for the lion’s share of employment losses in the U.S. economy. This deficiency remains the most significant impediment to a robust recovery.
Our research suggests that 65 percent of the job losses from 2007 to 2009 came from the drop in household spending induced by the collapse in home prices and its effect on a highly levered household sector.
The declines in consumption are far too large to be explained by the drop in house prices alone. It was the combination of collapsing home values and high debt levels that proved disastrous. High-debt areas have been plagued with delinquencies, deleveraging, and the inability to refinance into lower rates -- all characteristics of overleveraged households.Basically, the US had fake economic growth which was hidden for a few years and it worked until US consumers hit their credit limit. They then puked and job associated with housing and consumer spending industries got walloped. They have not recovered and will not anytime soon.
A bursting real estate and credit bubble in Canada would lead to a decline in consumer spending and would definitely add to the unemployment rate. How much is hard to say. One question to ask is "how much have the real estate and credit bubbles inflated Canada's job market"? We won't know until after the fact. But the bubbles have inflated many industries in Canada.
Consider the leveraging part of credit growth in our economy a big party. It has been going on for quite some time. But as everyone knows, the longer the party, the harder the hangover. The deleveraging part is the hangover. The hangover, which is actually the fix, will take years to get back to a healthy state. And Canada won't see a US style regression, a Canadian one that is just even 40% of what the US is experiencing, will be painful enough but will be needed to fix over indebtedness by Canadians.