Going forward, house price gains are unlikely to provide the same support to household wealth as they have in recent years. This, combined with the fact that the level of household debt has reached a record high, leads us to expect that the growth of household expenditures will slow to a pace closer to that of income.
There are risks, on both the upside and the downside, to the outlook for Canadian household spending. On the upside, household spending could be stronger than expected if growth in incomes were to rebound more rapidly than the Bank projects, or if borrowing continues to exceed income growth.