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Briefing highlights

  • The haunting income gap
  • Markets at a glance
  • Canadian bank buffer raised
  • Household debt a threat: CMHC
  • ECB formally ends quantitative easing
  • AltaGas cuts dividend, to sell stake

The divide

New findings from Statistics Canada underscore our haunting income divide.

The federal agency’s survey of spending in 2017 shows a stark gap between low- and high-income earners in Canada.

This research is even more troubling when you compare those numbers to actual income figures, showing what the haves and the have-nots are spending compared to what they’re bringing in.

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Next, look at how the individual income groups are spending their money, how much goes to shelter and how much to food from the total they’ve got.

Income disparity is nothing new, but Statistics Canada’s study is a sober reminder, and grist for the mills of policy makers. For all of us, actually.

Breaking it down, the 20 per cent of Canadian families at the bottom of the income ladder are paying out more than $11,700 for shelter. That accounts for almost 35 per cent of everything they buy.

The top 20 per cent, in turn, spend almost $30,000, or about 27.5 per cent, on shelter.

As for the national average, Canadian households spent almost $64,000 on goods and services last year, representing an increase of 2.5 per cent from a year earlier.

The highest average spending came in Alberta, at almost $73,000, and British Columbia, at $71,000, partly “due to higher expenditures on shelter in these provinces,” Statistics Canada said.

“Compared with the other provinces, households with a mortgage in Alberta and British Columbia had the highest average spending on mortgage payments,” the agency added.

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“Similarly, renters in these two provinces paid the most for rent, on average, compared with the rest of Canada.”

Those spending the lowest were in New Brunswick, at $52,600.

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Markets at a glance

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Bank buffer raised

Canada’s banks already meet a new regulatory threshold, but the decision to raise that benchmark isn’t sending a “positive” signal, an analyst says.

As The Globe and Mail’s James Bradshaw reports, the Office of the Superintendent of Financial Institutions raised what’s known as the domestic stability buffer by one-quarter of a percentage point, meaning banks have to build that increase into their capital reserves as protection in an economic slump.

“Simply put, the DSB was announced only six months ago and OSFI’s first update increased capital requirements,” said National Bank Financial analyst Gabriel Dechaine.

“As such, this move could create expectations that capital requirements will be nudged higher over time, especially with the Canadian economic outlook not as constructive as it was a year ago.”

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Household debt a threat

Soaring levels of household debt in Vancouver and Toronto have increased their vulnerability to higher interest rates, according to Canada’s federal housing agency.

The ratio of debt to disposable income in both census metropolitan areas is over 200 per cent, while the national average is around 170 per cent. In Vancouver, the debt to disposable income ratio climbed three percentage points to 242 per cent over the second quarter of last year, Canada Mortgage and Housing Corp. numbers show.

In Toronto, it rose three percentage points to 208 per cent over the same period, The Globe and Mail’s Rachelle Younglai reports.

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