The financial reckoning that Canadians have dodged is almost here, as a recession stokes unemployment and debt distress, says RBC. Read on.
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“The noticeable improvement in Canadians’ finances early in the pandemic wasn’t sustainable,” Hogue and Liu said. “Those gains are now reversing and will likely erode further amid a softening economy and higher interest rates.”that reset with Bank of Canada decisions are already bearing the brunt of heftier monthly payments.Article content
However, signs of distress are appearing in the rising rate of consumers who are 90 and more days behind on debt payments for instalment loans used for things such as home renovations, emergencies, debt consolidation, credit cards, auto loans and lines of credit. “A looming recession and the ongoing effect of higher interest rates will only add stress in the period ahead,” Hogue and Liu said.to hit the economy as early as the second quarter with growth falling 0.5 per cent followed by a decline of one per cent in the third quarter. A recession is defined as two consecutive quarters of negative growth.
This “mild” recession will push the unemployment rate up to as high as 6.6 per cent by the first quarter of 2024, from five per cent currently.
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