Analysis

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Analysis

In 2009, average household spending in Canada declined by 0.3% to $71,120, following the economic slowdown that began in the fall of 2008.

This was the first decline since 1997 when the annual Survey of Household Spending (SHS) was introduced. During 2009, the annual average rate of inflation as measured by the Consumer Price Index was 0.3%.

Excluding personal taxes, spending on goods and services was down 0.7% from 2008.

Average household spending declined in five provinces – Newfoundland and Labrador, Prince Edward Island, Quebec, Ontario and Alberta. The largest declines occurred in P.E.I. (-3.1%), and in Alberta (-2.2%) where average spending was highest at $84,976. The largest increase was in Manitoba (+4.9%).

Spending lower on discretionary items

Households reduced spending in 2009 on non-essential items or those that could be postponed, such as recreation and household furnishings.

One exception was spending for home repairs and maintenance, which increased 22% over 2008. In large part, this was likely due to the federal government home renovation tax credit program.

The largest declines in spending were for recreation, which fell 5.5% to $3,840 on average. Lower spending on recreation vehicles led the decline in this category; for example, spending on snowmobiles fell 11%.

Declines were widespread in such areas as sports gear, computer equipment and photographic equipment. However, spending at movie theatres rose 8.7% to an average of $100 per household.

Spending on household furnishings and equipment fell 3.6% to an average of $1,900 per household. This decrease was largely the result of declines in spending for rugs, window coverings, art and antiques, and workshop tools. Spending for furniture and appliances remained steady.

Overall spending for transportation remained virtually unchanged at $9,750 per household. The largest change in transportation was for leased automobiles, where spending fell 16%. Many major auto corporations halted leasing during the downturn in the fall of 2008 and did not resume until the fall of 2009.

Spending associated with moving, such as the hiring of movers, real estate commissions, appraisals and land transfer taxes all showed sharp declines.

Technological change continues to affect spending

Not all changes were associated with the economic downturn. Technological change continued to drive a number of long term trends in spending.

Spending for cell phone services rose 13% to an average of $620, surpassing spending for landline telephone services for the first time. Spending for landline services fell 4.5% to $550.

Over 77% of households reported having at least one cell phone. The proportion of households with landline service declined to 89%, a level last seen in 1965.

Spending on audio players fell 38%, while it was down 9.2% on digital cameras. These declines occurred as more cell phones were capable of playing music and taking photos.

Spending on reading materials, such as newspapers and books, fell 8.3% to $230 per household, while average spending for Internet access grew 10% to $340 per household.

Home Internet access was reported by 78% of households, while 72% reported having a broadband connection, up from 67% in 2008.

Food, shelter, clothing account for over half of spending by lowest income households

Personal taxes accounted for 20% of the average household's budget in 2009, while food, shelter and clothing represented 34%, and transportation 14%.

The one-fifth of Canadian households with the lowest income spent an average of $23,860 in 2009. Of this, almost 52% went to food, shelter and clothing. Personal taxes represented 2.8% of their budget.

In contrast, the one-fifth of households with the highest income spent an average of $147,090. They allocated about 27% of their budgets to food, shelter and clothing, while 30% went to personal taxes.

All these shares were similar to those in 2008.