OTTAWA, Jan. 22 /CNW/ - A Vanier Institute of the Family study released
today predicts the effects of the current economic downturn will be felt
around the kitchen table for years to come. In the 10th edition of its seminal
study The Current State of Family Finances - 2008 Report, the Institute puts
the current situation into context and finds that it has taken Canadian
families a long time to recover from past recessions.
Report author Roger Sauvé has tracked key indicators such as household
income and employment levels which indicate it can take years of lag time to
get back to where they were when the recession began. During the last
recession in the 1990's, it took five years for the economy to recover the
350,000 jobs lost, nine years for the unemployment rate to recover, and ten
years for family household incomes to get back to the levels they were when
the economy was healthy.
According to Clarence Lochhead, Executive Director of the Vanier
Institute, "Average Canadian family finances were not in good shape when the
economy turned sour, and thus the capacity of families to absorb economic
shocks like the one we're going through now is not nearly as good as it should
Lochhead adds "While average household income is 12% higher than in it
was in 1990, spending is up by 24%, and total family debt is up 71%, growing
six times faster than incomes. Families have been living a lot closer to the
edge of the monthly budget, and in many cases far beyond it."
Lochhead also notes that most of family budgets today are, by necessity,
based on two incomes. "If one of those jobs is lost, it's not just an
inconvenience. It can have a crippling effect on how a family houses, feeds,
and clothes itself."
Among other key findings of the report which can be downloaded from the
Vanier Institute website at www.vifamily.ca:
- Debt loads are in the danger zone - average household debt soared to
over $90,000 in 2008
- Annual savings shrank to 3% of disposable income in 2008, from 13% in
- The debt to net worth ratio is higher than its been in 44 years
- Canadian household debt and savings ratios are more similar to US
households than is widely believed.
- Over 600,000 Canadian households now have a dangerously high Debt
Service Ratio (DSR) of over 40%.
As the federal government prepares its budget and outlines plans for
massive deficit spending, Lochhead suggests that in addition to investing in
roads, bridges and other capital projects, the government should also look at
its "social infrastructure" spending and investments in "human capital" to
help Canadian families get through these exceptionally turbulent times.
To download the report http://www.vifamily.ca/library/cft/famfin08.pdf
For further information:
For further information: or for interviews: Clarence Lochhead, Executive
Director, Vanier Institute of the Family, (613) 228-8500 x214,
firstname.lastname@example.org; Roger Sauvé, President, People Patterns Consulting,
(613) 931-2476, email@example.com