Record household debt

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Unprecedented household debt levels will give Canadians a rude awakening on their unpaid credit card bills if another economic downturn materializes in the coming years, according to a new report issued Wednesday.

Moody's Investors Service it will be closely watching Alberta and Saskatchewan for signs of increased delinquencies on consumer debt portfolios.

The two provinces already saw a doubling of initial unemployment claims in the latter half of 2016, a result of a prolonged downturn in the oil sector after the global price of crude began to plummet in late 2014.

"We wouldn't be surprised to see that as an area of strain in the country," said Jason Mercer, an assistant vice-president at the ratings agency.

Moody's said card loan performance in these Prairie provinces in coming quarters will be "an illustrative first test" of the ongoing strength of the banks' Canadian credit card portfolios and the broader environment for consumer credit.

"We're all a little vulnerable right now, here in Canada," Mercer said.

"If there's a shock in employment, somehow, that could cause consumers to change their spending and their debt service patterns."

Canadians have seen their dollar-to-debtload nearly double over the past 30 years, as lower interest rates and relatively small economic stresses encouraged more people to spend against things rising house prices, Mercer said.

Moody's says consumers owed $1.69 of debt for each dollar of their disposable income as of March 31.