Once not so long ago, terms like debt, Black Friday and the New Christmas were unknown names that are now indelibly connected to the traditional Canadian Christmas.
Black Friday and Cyber Monday have become part of the seasonal jargon, better known today than sugar plums and reindeer. These gigantic sales thrusts for the consumer dollars are the massive holiday markers that have been growing substantially since 2010. They are highly successful, partly because we want to both save money and feel the need to spend it.
Another reason for the success of these sales pitches is they are not exclusive. Almost any store can use the name Black Friday to suggest substantial savings and the emphasis is on deals. Who doesn’t want a deal? The fact you must spend to save is almost irrelevant.
This is Christmas in the digital age – billions of dollars taken in worldwide during a single day. Black Friday is a U.S. phenomenon that quickly caught on in Canada. No gift is too big. Why not a car – or boat?
The first recorded use of the term ‘Black Friday’ had nothing to do with holiday shopping.
In 1969, two unscrupulous businessmen, one of them being the notorious Jay Gould, conspired to corner the American gold market, which was at that time the basis for the U.S. dollar. The original shopping Black Friday began in Philadelphia for the day after the U.S. Thanksgiving, where it was used to describe the heavy and disruptive foot and vehicle traffic that would occur on the day of the big sale.
This great cascade of consumer dollars pouring into the economy should be positive. Yet where exactly are the benefits? The Canadian economy should be thriving this time of year, but we lost 71,000 jobs in November. Perhaps it’s partly because digital shopping requires fewer people along the line, from the raw producer to the consumer. Maybe there are benefits in the fact this big spend keeps teetering companies from going under, at least maybe for another year. But isn’t that simply putting off the evitable? All would be fine, of course, except much of the money spent this Christmas is borrowed money.
Spending more and enjoying it less? Perhaps, particularly when the credit card bills arrive in the new year. Canadians borrowed $7 billion in consumer credit and that doesn’t include mortgages where the borrowing reached $13.2 billion.
The amount of Canadian household debt has been rising for about 30 years, not just in absolute terms but also relative to the size of the economy. At the end of last year, Canadian households owed just over $2 trillion. Mortgages make up almost three-quarters of this debt and the Bank of Canada says household debt is a growing preoccupation – whatever that means. Many people are drowning in debt. Eight per cent of indebted households owe 350 per cent or more of their gross income. That’s a bit more than 20 per cent of total household debt. These are the people who would be most affected by an increase in interest rates.
Officialdom, those looking after such things, assure us they’re closely watching the vulnerability represented by this group and the debt they carry, how it poses a risk to both the financial system and the economy. It is important for these households to understand how very vulnerable they are.
Bruce Graham is a retired broadcast journalist, author and playwright who lives in Amherst. He is a member of the Amherst News Community Editorial Panel.
