No Debt Worries? Really!

The Canadian TD bank in February reported that:

1 “For well over a decade, personal disposable income (PDI) has grown more slowly than the overall Canadian economy.”

2 “The imbalance between income and spending growth has caused the personal savings rate to fall to a record low of just 0.0 per cent, as of the third quarter of 2004.”

3 “…personal debt has been rising in Canada and has reached record levels. As of the third quarter of 2004, personal debt was equal to 113 per cent of personal disposable income, a new record high.”
What I take issue with is their comment: “However, talk of a looming consumer debt crisis is misinformed for two crucial reasons. First, the rising debt level has been more than offset by the growth in household assets. In fact, personal wealth rose by 10 per cent last year in Canada - the fastest pace in almost a decade. Second, the share of personal income needed to keep a handle on debt interest costs in 2004 was the lowest on record.”

First they don’t define personal wealth, it may be just a count of assets that are funded by further debt. Their second reason is based solely on low interest rates – something most experts see as rising over the next few years.
Scrooge