Varun Kohli December 21, 2023 No Comments

Canadians are spending 8.1% of their disposable income on mortgage payments, whereas U.S. consumers are allocating roughly 4% for theirs. This difference in consumer spending In the realm of Canadian economics, the dynamics of mortgage debt have emerged as a significant factor influencing the country’s economic growth compared to its U.S. counterpart. BMO’s senior economist, Sal Guatieri, draws attention to the pivotal role of mortgage debt in delineating the contrasting growth trajectories between Canada and the U.S.

Guatieri highlights a critical distinction in household expenditure patterns, citing how Canadian real consumer spending stagnated while the U.S. experienced a 3.6% annualized increase. The disparity arises from Canadian households allocating double the share of disposable income towards mortgage payments compared to their U.S. counterparts. This trend suggests a potential for continued increase in Canadian mortgage payments, especially as rates reset at higher levels post-pandemic, while the U.S. benefits from relatively stable payments due to long-term fixed-rate contracts.

This discrepancy not only delineates economic performance but also hints at relative downside risks for the Canadian economy and its currency. Guatieri suggests the likelihood of earlier rate cuts from the Bank of Canada compared to the Federal Reserve in response to this scenario.

Shifting the focus across borders, Morgan Stanley’s U.S. equity strategist, Michael Wilson, emphasizes the dominance of liquidity over fundamentals in market performance. He questions whether the Fed will counter the bond market’s rate cut pricing, considering a potentially uneven path toward disinflation alongside stronger-than-expected jobs reports.

Despite negative trends in earnings revisions for major indices like the S&P 500 and Russell 2000, a buoyant liquidity environment continues to support valuations, acting as a counterbalance to fundamental dynamics.

In a broader perspective, TD Cowen’s Theme’s 2024 report touches upon multifaceted themes spanning geopolitical shifts, U.S. elections, demographic changes, technological advancements, and healthcare landscapes. Notably, the resurgence of U.S. manufacturing emerges as a particularly actionable theme.

TD Cowen’s insights shed light on the profound implications of nearshoring, citing perspectives from North American railroad networks and industrial players. The extensive integration of these networks with factories indicates a significant long-term growth opportunity, with a surge in industrial development projects. Echoing this sentiment, Eastern Class I NSC anticipates a considerable influx of projects, primarily in the Southeast and Midwest, emphasizing an uptick in U.S. factory constructions compared to the last decade.

The narrative of industrial resurgence finds validation in the import/export volume data from the Port of Lázaro Cárdenas, showcasing robust volume growth. These indicators, like the 42% year-over-year increase in 3Q23 volumes, serve as proxies for North American industrial growth, reaffirming the renaissance in the manufacturing landscape.

The intricate interplay of mortgage debt, market liquidity, and the industrial landscape presents a vivid tapestry of economic movements, offering glimpses into the intricate gears that drive the economies on either side of the border. As Canada navigates its mortgage challenges and the U.S. witnesses an industrial reawakening, these insights pave the way for informed economic decisions in an ever-evolving financial landscape.

Tembo’s debt consolidation loans can offer a valuable solution for those seeking to consolidate debt and enhance their financial stability. This is a useful tool that has helped a number of our clients reduce the total amount of interest they pay to free up money for other purposes. By consolidating multiple high-interest debt payments into one convenient and flexible loan, individuals can simplify their financial life, clear bad, high interest debt, with the hopes of contributing to an improvement in credit scores. A better credit score today means that your leverage with a bank in getting you the best possible mortgage rate will increase. Or if you can’t qualify for a traditional mortgage from a big bank today, because of poor credit, our debt consolidation loan can improve your score and put you in a better spot.

One significant advantage of using a private mortgage for debt consolidation is the rapid enhancement it can bring to credit scores. When debt is consolidated into a single, flexible loan, monthly interest payments decrease. This facilitates faster repayment of the debt principal, leading to a reduction in outstanding debt. A lower outstanding debt, coupled with timely payments, positively impacts credit scores. Many clients who have chosen Tembo’s private debt consolidation loan have told us that they now can qualify at a big bank because their credit score is improved.

Moreover, enhancing one’s credit score through debt consolidation opens doors to other financial benefits. For many individuals, refinancing their mortgage becomes a more attractive option, allowing them to free up cash, reduce monthly payments, or expedite debt repayment. Consolidating debt and boosting credit scores through a private mortgage transforms refinancing into a more viable and attractive option for securing one’s financial future. Rapidly clearing multiple high-interest debt products makes a prospective borrower more appealing to big banks.

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