Already vulnerable, boomers most likely to be piling on debt, CIBC says The USA Times

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Saturday, May 19, 2012

Already vulnerable, boomers most likely to be piling on debt, CIBC says

(This file photo taken Nov. 18, 2009, a pile of MasterCard and VISA credit cards are displayed in Frankfurt, Germany. THE CANADIAN PRESS/AP)

OTTAWA - A new analysis of household finances shows Canadians least able to afford it - boomers nearing retirement and those already in hock - are the ones piling up the most debt.

The CIBC says its analysis suggests Canada may have a bigger household debt problem that the raw numbers suggest.

The raw numbers are bad enough. The ratio of household debt to disposable annual income has reached 153 per cent.

That's a record high for Canada and approaches the 160 per cent level that preceded the housing collapse in the United States four years ago.

But a closer look at who holds the debt shows those already above the 160 per cent line - about one-third - hold three-quarters of all the household debt.

As well, a rising share of the highly indebted are 45 years and older, a time when the opposite would be expected.

CIBC chief economist Avery Shenfeld says the micro analysis of debt does not point to a crash, but suggests that household spending will need to slow and will dampen economic activity going forward.