Something had to give. As Canadian wage-earners purchasing power stagnated, they increasingly relied on consumer credit and mortgage loans. The rise in personal debt coincided with the decline of wages and consumption as a share of GDP over the same period.
Why does it matter? This was a clear indication during the reference period that demand was becoming unsustainable, increasingly fueled by consumer debt. Yet much of the analysis of the recessionary period that followed focused on the supply side. The need to increase productivity, i.e. do more with less workers. The need to control social spending, i.e. cut government transfers many Canadian rely on for essential services and to supplement their consumption. The need to cut taxes to encourage investment, i.e. the idea the charts in the previous posts show was wishful thinking, but that nevertheless resulted in potential government revenues being diverted to corporate profits.