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He cited warnings from the Bank of Canada to consumers as one of the reasons Canadians are increasingly focused on paying down debt. Bank of Canada Governor Mark Carney has repeatedly told consumers that the overnight lending rate of one per cent will not last indefinitely.
Tal foresees a significant reduction in debt accumulation by Canadians. He said the fact that debt accumulation is softening shows financial maturity.
“We actually borrowed our way out of the recession, outpacing the G7 in recovery if you look at GDP growth. We had the consumer to rely on,” he said. “Now we are exhausted, this consumer is exhausted. There isn’t pent-up demand for consumption.”
Hal believes the generation now in their 20s will contribute more robustly to retirement savings than their parents did because they don’t have the same belief that the Canada Pension Plan (CPP) or company pension plans will sustain them in retirement.
The percentage of respondents who named building savings as a financial priority has remained the same for three years, at 10 per cent. Managing day-to-day spending was one of the other four financial priorities named by respondents.