A new report from CIBC paints a picture of the Canadian consumer, whose spending and borrowing have helped avoid an economic slowdown and whose projected spending will continue to buoy the economy.

The first edition of the CIBC Consumer Watch notes that the 500,000 jobs created this year convinced consumers of the low risk in spending and borrowing, despite the fact that 42% of the jobs were part-time, and 60% of the remaining full time jobs were low paying. CIBC says their confidence flies in the face of very low income growth, thanks to the low quality of newly created jobs. Real net income rose by only $170 per person during the first nine months of 2002.

The report also notes that consumers are borrowing more because they are confident about the future and have more access to credit through low interest rates.

Year over year, both mortgage credit and consumer credit are rising at 7%, personal lines of credit at 25%, and Canadians have added an estimated $15 billion in extra borrowing against the increased valuations of their houses since 2000.

“The current expansion in consumer spending is one of the most leveraged in the post-war era,” said Benjamin Tal, CIBC World Markets senior economist. However, he points out that the consumer’s debt-to-asset ratio has been stable over the past few years, reflecting the strong gain in housing wealth that has more than offset the decline in equity wealth.

The report concludes that facing limited income growth, consumers will continue to borrow. It notes that household credit is expected to rise by 6% in 2003, slower than in 2002 but enough to help sustaining a healthy 2.7% growth in real consumer spending next year.

To view a full copy of the report visit: http://research.cibcwm.com/economic_public/download/cw-12112002.pdf