Thread by @JenniferRobson8

Pull up a chair.
Let's talk about the heart-stopping share of Canadians supposedly '$200 away from insolvency'.

Apparently, I have to keep giving this talk because there's a quarterly clickbait survey that sometimes gets eyeballs.
FML #cdnecon #cdnpoli

If you want to re-read the OG thread from 2019 here's a link:

https://twitter.com/JenniferRobson8/status/1176266181218582528?s=20&t=csEpa6r04xul4TQFfqATgw

Here's the Q from QP that raised the claim once again...
Like a zombie, this undead data point continues to eat brains.
Note: I am referring to the *data point* not a person or public figure.

Let's start with the source cited.

It's important to know that the claim comes from *MNP Debt Ltd*, a division of MNP Ltd (previously Meyers Noris Penny Ltd), a professional services firm that offers accounting, tax-filing, + other services to corporate & consumer clients.

From their corporate registration and corporate coms, I think MNP is probably structured as a CCPC and the debt counseling division is set up in a franchise model, for a network of affiliates (they say 50 licensees) to offer service under their umbrella across the country.

They work for both consumers in financial distress and creditors. mnp.ca/en/services/co…
There are non-profit alternatives in the credit-counseling market that only work on the consumer side.
No links lest I be accused of bias, but you can Google.

If you want to know more about the credit counseling market in Canada, you should really read work by @saulschwartz & Stephanie Ben-Ishai, like this: digitalcommons.osgoode.yorku.ca/ohlj/vol45/iss… and this: onlinelibrary.wiley.com/doi/abs/10.100…

The zombie data point is from a quarterly survey (n = 2,000) conducted by Ipsos under contract to MNP debt. Here was the Ipsos headline from the last quarterly report on June's fieldwork: ipsos.com/en-ca/news-pol…

But, kudos are due to MNP Debt Ltd for making the historical series available online here: mnpdebt.ca/en/resources/m…

Unfortunately, the '$200 from insolvency' question doesn't seem to appear in the tables.

So here's what I've done: I've graphed the MNP Debt/Ipsos results from the historical data site & I've gone through 400+ press releases to reconstruct as much of the historical data on this 1 indicator as I can (like I said...FML).

So far, these are my fav archival releases

New fav from March 3, 2020... just as the pandemic was hitting:

Here's a graph of results from the MNP Debt data on 4 indicators from June 2019 to the most recent release. Purported '$200 from insolvency' is in red (because... of course!)

To my eye.. that's a lot of stability, remarkable stability, given the shocks we've had since 2019.

As I've *previously* explained, $200 in the bank AFTER paying all obligations is not the same as $200 from insolvency.
If you can service your obligations, you are, by definition, not insolvent. We also don't know what respondents included in their understanding of 'obligations'

If that includes automated RRSP/TFSA/pension savings, $200 left-over means you are not insolvent.
If that includes monthly repayment of consumer loans, credit cards or other debts, $200 left-over means you are not insolvent.

You can read much more about consumer insolvency rules (including proposals and bankruptcy) here: ic.gc.ca/eic/site/bsf-o…

The last time I tackled this (head-desk, head-desk), I went to the national data on household financial security and spending (from Stat Can). Again, see the OG thread here:

https://twitter.com/JenniferRobson8/status/1176266181218582528?s=20&t=csEpa6r04xul4TQFfqATgw

I'm not going to do that this time because data sources are mostly pre-COVID.

Household resources AND composition of spending have likely changed.
We need better and faster data with n> 2K respondents and not beholden to for-profit bankruptcy trustees.
There, I said it.

Stat Can is starting down a v good path here: www150.statcan.gc.ca/n1/daily-quoti…

This time, I'm going to ask instead is the zombie data point hooked up to anything? Does it move, meaningfully, when other indicators of national interest move?

Here's the '$200 from insolvency' vs consumer insolvencies (y-y change for same month as survey).

The MNP Debt survey suggests little change, even through one of the biggest economic and social shocks ever. The supposed '$200 from insolvency' indicator also doesn't seem to track actual consumer insolvency trends as reported by OSB here: ic.gc.ca/eic/site/bsf-o…

Let's throw more noodles on the wall to see if *anything* sticks.
Here's the same '$200 from insolvency" indicator with the BoC rate, effective household interest rates and the federal fiscal balance ($B on right axis).

What I see is, again, remarkable unresponsiveness of this indicator against pretty massive macro changes in monetary and fiscal policy (some that would have helped and hindered household affordability concerns).

Let me be super clear...

I am NOT suggesting that there aren't households in Canada who are financial precarious, who experience financial shocks that make it hard to plan or save or make ends meet.
You can read some of my work with amazing co-authors on that here: onlinelibrary.wiley.com/doi/abs/10.111…
and..

here: cpacanada.ca/-/media/site/o…
and here: researchgate.net/publication/35…

There are households who are particularly vulnerable to the effects of inflation, as @GillianPetit @LindsayTedds and I discuss here: policyoptions.irpp.org/magazines/sept…

Tax cut gimmicks won't help them.

Neither will gotcha' claims based on zombie data points.

Goodnight.