Consumers to pull back from spending 'like drunken sailors,' TD report suggests
02.07.2008 18:03
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- Source: cbc.ca
Canadian consumers over the next two years are expected to rein in their spending habits as the job market softens and the real estate market cools, according to a TD report released Wednesday. The report suggests spending growth will pull back from above five per cent in 2008 to 2.6 per cent in 2009 in year-over-year comparisons.
'I don't think this was rocket science to know that sooner than later that there would have to be belt tightening coming our way.' --Sunlover Add your comment "Households have been spending almost like drunken sailors over the past couple of years, which provided critical support to the economy when the export-oriented manufacturing sector had been suffering under the weight of a strong currency and flagging U.S. demand," said the report by TD economists Craig Alexander and James Marple. "The central question is whether consumers can keep tipping pints or whether a hangover is in store." Alexander and Marple suggest commodity prices will moderate while the Canadian nominal GDP growth will fall from 5.9 per cent in 2007 to 3.5 per cent in 2009. According to the report, the rate of job creation in the first quarter reached two per cent — with half of the new jobs based in Ontario. The study noted job creation increased construction and public administration sectors, both of which now appear to be slowing. The real estate market is also expected to moderate, the report said, pegging average national prices to increase by two per cent in 2008 and 3.5 per cent in 2009. Price corrections were expected in regions including Saskatoon and Calgary. The rate of personal wealth will slow as growth in financial assets temper, the report said. "Consumers will still be able to largely tap past gains in personal wealth, but the support to consumer spending should wane with time, implying more modest spending growth ahead. It should also be noted that the cooling in real estate will not only impact household wealth, but it will also tend to dampen demand for housing-related purchases, such as furniture and appliances," said the report. RelatedInternal LinksIN DEPTH: Canada's balance sheetsConsumer HeadlinesTomatoes may not be source of salmonella outbreak: U.S.The American government is widening its hunt for the source of a major U.S. salmonella outbreak, turning its focus beyond tomatoes to other fresh produce.Consumers to pull back from spending 'like drunken sailors,' TD report suggestsCanadian consumers over the next two years are expected to rein in their spending habits as the job market softens and the real estate market cools, according to a TD report.Moving day leaves some families in sheltersHousing activists say about 11 Montreal families were left homeless in the wake of Quebec's annual moving day.California's safflower crops bloom in low-water yearHaving to make due with less water, California farmers are reassessing their planting of tomatoes, cotton, corn and other water-intensive crops.Safety group wraps up study of donairsDonairs, a popular late-night snack in Halifax, are coming under new safety guidelines this summer. Consumer Life FeaturesCRUDE AWAKENINGSPricey oilFrom bloomers to bagels, the trickle down costENERGYGasolinePeculiar pump price protestsTECHNOLOGYDesign softwareThe building blocks of LegoBLOGFood BytesHunting for the perfect fruitBLOGComm-OdditiesLife fetches $384,000 on eBayPeople who read this also read …
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