Is it one to which Albertans should pay attention?
And on a per capita basis, Albertans spent $1,488 in August. That’s far higher than any other province, and significantly above the Canadian average spending of $1,120 per person.
What is behind this consumer binge in Alberta? Could it all end badly, like it did for the gluttonous diner in the Monty Python sketch? Or are there good reasons for this unbridled spending in Alberta?
One thing to consider is average weekly earnings. Also reported this week by Statistics Canada, Albertans’ paycheques are significantly higher than they are in other parts of the country. More cash in your bank account means more money to spend.
Another fact to keep in mind is demographics. Ever the outlier, Alberta has a far younger population than any other province, and that drives spending. Young families with children are in a different stage of life than a retiree, and being in that stage requires spending on things like baby strollers, skates for kids in hockey, and sometimes larger homes. The same goes for the single, unattached 25-year-old who has just moved to Alberta for work. She is much more likely to be in a borrowing and purchasing stage of life, in contrast to her parents back home in New Brunswick who are into their savings and “de-accumulation” stage.
Related to the last point is Alberta’s population growth, which is expanding at about 2.5 per cent per year. In general, more people arriving in Alberta will naturally boost overall retail spending—and that’s a good thing for the province’s economy.
Still, there is the question of household debt, and, in this respect, every Canadian (including Albertans) should pay attention. Debt and borrowing can be a very helpful and indeed a smart way to manage your finances, especially when it comes to mortgage debt. But interest rates at generational lows have in some cases encouraged too much borrowing and spending. Average household debt-to-income levels in Canada are at record highs. This is what keeps Bank of Canada Mark Carney tossing and turning at night. If the national economy was to sustain a major economic downturn and a spike in unemployment, there would be many households suddenly in serious trouble.
Alberta is a rapidly growing province. Wages are high and the employment situation is currently among the best in the world. People are enjoying the benefits of hard work—but they like to play hard, too. Retail spending is a part of that equation, and Albertans who manage their finances properly should not feel guilty for buying that extra new hand bag or another PVR for the upstairs bedroom.
But, of course, there are practical limits to everything. Retail spending in Alberta is likely to temper in the coming months as some consumer saturation sets in. And rather than a sign of a faltering economy, the expected pull-back in spending will suggest that shoppers in the province know when to say “enough.”
One more waifer-thin mint is definitely NOT always a good idea.