“From a balance sheet perspective, U.S. consumers are in their best shape in decades,” the report said.
By contrast, Canadians owed about $1.77 in credit market debt for every dollar of disposable household income in the second quarter of this year. Richardson GMP noted that this figure is high even compared to the precarious situation south of the border before the financial crisis.
And while the US economy added 266,000 jobs in November, Canada posted its biggest monthly drop since the financial crisis, losing 71,200 jobs.
Consumer insolvencies were also up 9.2% year-over-year in Canada as of October, according to the report. “Admittedly, this is starting from a low base, but with the employment situation having deteriorated quite significantly, this could lead to a stronger increase,” the report said.
Richardson GMP pointed to Canadian banks’ results in the fourth quarter, which reflected the credit situation, with all banks reporting higher provisions for credit losses.
“The economic mood in Canada has deteriorated recently, and the increasingly defensive posture of local banks leads us to believe that the trend going into 2020 will be towards tighter lending standards, which could further constrain the consumer,” the report said.
Fortunately, there remains the American consumer, whom the report calls the “last person standing” in the global economy.
“The good news is that while the Canadian consumer is at risk, it’s the US consumer who matters most to the global economy,” the report said.
And while they “hold the line,” Richardson GMP points to indicators such as job openings and consumer confidence to watch over the coming months.
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