Figures released late last week indicate that even debt-free Canadians could eventually feel a pinch from someone else's maxed-out credit cards.
Canada Mortgage and Housing Corp. board members received an update in March on the country's credit and housing trends, which contained a warning: the steady climb of the household debt-to-Gross Domestic Product level had put Canada's long-term economic growth prospects at risk.
The CMHC document pointed to a study that argued household debt accumulation eventually hampers economic growth over the longer term, eclipsing the nearer-term benefits of consumption.
The strong expansion of household spending, encouraged by a prolonged period of historically low borrowing rates, has created concerns over Canadians' record-high debt loads, and has also been a major driver of economic growth.
Citing international research, the CMHC presentation points to an estimate that says a one-percentage-point increase in household debt-to-GDP tends to lower growth in a country's real gross domestic product by 0.1 percentage points at least three years later.
An accompanying chart in the CMHC presentation showed that between 2010 and 2016 Canada's household debt-to-GDP level rose by more than five percentage points. Statistics Canada says the household debt-to-GDP ratio increased from almost 93% to just over 101% at the end of 2016.
A reduction of even 0.1 percentage points in the country's GDP can have an impact. For example, Canada saw year-over-year growth in real GDP last year of 1.3%.
