By: Murray McNeill
WINNIPEG — Manitoba households are the least vulnerable in the country to potential negative economic events such as a big spike in interest rates or a plunge in house prices, according to a new report by TD Economics.
"The focus nationally on household debt has raised questions about which regions face the most significant challenge," said TD chief economist Craig Alexander. "This new index does not predict events, but it does shed light on those provinces that are most susceptible to downside risks."
The report says that not only does Manitoba record the lowest vulnerability of any region, it’s also the only jurisdiction whose risk index, even when adjusted for likely increases in interest rates, is lower than it was in 2006.
It says the provinces with the most vulnerable households are British Columbia, Alberta, Saskatchewan and Ontario, while Quebec and the Atlantic region fall in between the two extremes.
It notes household vulnerability has been escalating in most regions since 2007, mainly because household debt loads have been rising faster than household incomes.
The negative economic events that could put Canadian households at risk are things like a substantial correction in house prices, a major disruption in incomes, and an unexpected large increase in borrowing rates.
But the report says the probability of one or more of these events occurring in the coming years remains relatively low.
*Source: Winnipeg Free Press, Online Edition, February 9, 2011