Rate increase will have a significant impact on many Canadians, including the 33% who report being unable to keep up with monthly bills and debt payments.
We are witnessing one of the biggest contradictions of recent times.
On the one hand, the media and the government tell us that our economy is doing better than ever.
On the the other hand, pessimism about the future of the economy has reached massive levels, household debt is at a record high, one third of Canadians can’t keep up with monthly payments, and another 48% have just as $200 cushion every month separating them from serious financial trouble.
Almost nobody feels that our society is richer, it takes two incomes to barely afford what was once possible with one, and the much-hyped unemployment rate leaves out those who have given up on looking for work and doesn’t focus on the quality of jobs – which has severely declined.
Now, as a result of the prevailing government mindset and the messaging about how great the economy is, interest rates are going up again.
The Bank of Canada cited ‘strong’ economic numbers as the justification for raising the benchmark interest rate from 1% to 1.25% (the highest level since 2009), but the projections for future growth are not good.
In fact, a recent report said Canada’s economy would only grow a minuscule 1.7% per-year over the next half-decade. When accounting for population growth and the true inflation rate that we experience on the ground (rather than the reported rate), this is no growth at all.
As as result, the gap between the message we are told about the economy and the truth of what we are experiencing will only continue to grow.