Canada's Housing Bubble

Dec 01, 2010 calgary.ctv.ca

The latest economic indicators from Statistics Canada suggest that while the country's consumer spending and real gross domestic product are increasing, it's overall rate of economic growth is slowing.

On Tuesday, Statistics Canada reported that the country's real GDP increased 0.3 per cent in the third-quarter, down from the 0.6 per cent growth seen in the preceding quarter.

Consumer spending grew about 0.9 per cent in the quarter, in what StatsCan described as being "similar to the average growth of the previous five quarters."

After four quarters of growth, exports of goods and services declined 1.3 per cent during the same time period. Drops in automotive exports (2.1 per cent), energy products (8.5 per cent) and commercial services (1.7 per cent) were the three main contributing factors, StatsCan said.

A 1.6 per cent rise in imports of goods and services marked the fifth consecutive month of growth.

The prices of goods and services were up 0.4 per cent in Canada during the third-quarter.

Rising prices in goods and services also pushed forward a 0.9 per cent rise in wages and salaries.

BNN's Michael Kane said the overall economic numbers weren't necessarily bad, but were definitely disappointing.

The real GDP numbers, for example, equate to a 1.0 per cent growth when projected to a year-over-year rate of growth.

"That's still growth, it's not recession…but it was expanding at a rate of 2.3 per cent in the previous quarter. So you get that slowing effect," Kane told CTV News Channel on Tuesday morning.

Canadians spent more on footwear and clothing in the third-quarter, but spent less on furniture, furnishings and other things for their homes.

Kane said the drop in house-related expenditures was surely related to the cooling off of the housing market.

"Because of softness in the housing market, households are not being created as quickly as they might be in a totally healthy economy," said Kane.

StatsCan reported that housing investment was down by 1.3 per cent in the third-quarter, the first such decline in more than a year.

Spending on new and used vehicles increased 1.8 per cent, reversing a two-quarter trend of decline.

With files from The Canadian Press