Recent data from Statistics Canada paints a concerning picture of Canadian household finances. The ratio of household credit market debt to disposable income edged upwards in the first quarter of 2024, reaching a new high of 173.9 percent on a seasonally adjusted basis. This represents a slight increase from the 173.5 percent recorded in the preceding quarter.

What does this mean? Simply put, for every dollar of disposable income, Canadian households owed $1.74 in credit market debt during the first quarter. This signifies a persistent trend of debt growing at a faster rate than income.

While the household debt service ratio – the proportion of disposable income allocated to debt payments (principal and interest) – remained stable at 14.40 percent, the escalating debt-to-income ratio raises significant concerns about the overall financial health of Canadian households. This worrying trend warrants close monitoring and consideration of potential implications for the Canadian economy.