Canadian Economic Recovery: Heads in the Sand?
With the way that Canadians are spending at present, you would never know that we have been having—and will be having repercussions from—a recession for years to come.
While Americans are having to learn new frugal habits, Canadians seem to be back to their old spending habits. However, we would benefit from continuing a more cautious method of spending so that we can better make it through the economic recovery that needs to take place.
While it is true that our recession has been a lot less severe than the one that the Americans have been experiencing, our recession has still been affecting most Canadians in some way.
It seems that when the recession first hit, Canadians exercised cautionary spending for a mere few months but very quickly returned to their previous spending habits. Unfortunately, while increased spending does help the economy recover, it doesn't help out families who may be experiencing less disposable income cope.
Both the federal and provincial governments are working towards helping the economy recover from our Canadian version of the recession in a number of ways. The Canadian—as well as the provincial—governments, are saving money during this economic climate by spending less and taxing more.
Across the nation, provincial governments are already starting to save by boosting sales tax or the taxes put on items like alcohol, cigarettes, and gasoline. While the federal government is not planning on boosting income tax this year, they do have plans to cut back spending this year to help make up for shortfalls. There is no telling what kind of taxes will be in the works for next year's budget though; user fees and reduced services are very likely.
Banks' interest rates are sure to rise over the next year and homeowners will be paying more for their homes as a result; as well, any loans holders will find that interest rates will eat up more of their income for the next while as well. Across the country, fuel costs will also help drive up the price of transportation as well as food and other products that require shipping.
While it is possible for us all to coast along financially for a while more, we will all soon be forced to buy less in the near future whether we want to or not. Higher prices will ensure that we are getting less for our dollar, so we need to spend those dollars on more important things.