MNI DATA IMPACT: StatsCan Sees Debt:Assets as Distress Measure>

By Greg Quinn 

     OTTAWA (MNI) - Statistics Canada said its widely followed measure 

of consumers' financial health probably isn't the best indicator, 

because it focuses on incomes instead of assets. 

     The agency said its ratio of household debts to assets is more 

closely tied to financial distress than the more popular ratio of debt 

to disposable income. Policy makers and the media have focused most of 

their attention on record highs in the debt to income ratio. 

     One problem with the the debt to income measure is many poorer 

families have small debts, meaning their ratios will be low even if they 

are "financially vulnerable," Statistics Canada's report published 

Wednesday said. 

     Consumer spending fueled by debt has led Canada's economic growth 

over the last decade. While population growth and record low 

unemployment have helped consumers, policy makers are concerned 

some families will struggle with rising interest rates. Government 

officials have also tightened mortgage lending policies to avoid a 

potential correction in overheated Vancouver and Toronto housing 

markets.  

     Sixteen percent of families with a debt-to-asset ratio greater 

than 0.50 skipped or delayed a non-mortgage payment in the last year, 

according to a major database of 2016 figures. That compares with 7% for 

families with a ratio of 0.25 or less.

     Families that didn't own their home and single-parent households 

are also more likely to skip or delay a debt payment, Statistics Canada 

said. 

--MNI Ottawa Bureau; +1-613-314-9647; greg.quinn@marketnews.com 

     [TOPICS: MACDS$,M$C$$$]