Article content

Good Morning!

We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Posthaste: What Canada’s mysterious rise in insolvencies says about the economy Back to video

So what’s up with rising household insolvencies in Canada? In September they saw a 19% spike from a year earlier, the biggest annual gain since 2009. So far this year, there have been 102,023 consumer insolvencies, the second-most for the first nine months of a year in records dating back to 1987. True, the gains come from low levels, but they are accelerating at a pace that’s normally seen in times of economic distress.

“Obviously, this is not the typical cyclical climb in household credit stress,” write CIBC economists Benjamin Tal and Avery Shenfeld in a report this week.

We are not in a recession; unemployment before November was near multi-decade lows. Nor is this an Alberta problem. Ontario saw just as big a spike as this province which is enduring a prolonged downturn. The only provinces that escaped the national increase were Quebec and Saskatchewan.

Tal and Shenfeld say clues to why we are seeing higher insolvencies in what looks like a healthy environment — and a lesson for investors, lenders and monetary policy makers — can be found in the type of debt experiencing rising write-off rates.