The impact of declining oil prices in the last quarter of 2014 is starting to manifest itself in consumers across Alberta and Saskatchewan, according to a new study by American credit reporting service TransUnion.
Jason Wang, co-author of the study and TransUnion’s Canadian director of research said both provinces could also expect even sharper increases in credit and loan product delinquencies in the coming quarters.
“The credit card payment or the reduction in the credit card payment amount is the very first sign when the consumer has a cash flow problem, and not all the lenders are looking at this.”
The study zeroed in on Fort McMurray, and found the number of residents there who pay no more than twice the minimum amount due on their credit card balances has increased 10% since last summer. The oil and gas industry currently makes up 26% of Alberta’s GDP, and 16% of Saskatchewan’s.
The study also pointed out Industry Canada numbers that show Alberta (0.50), Quebec (0.32) and Saskatchewan (0.23) with the strongest correlation between oil prices and insolvencies from 1987-2013. B.C. had the second lowest (0.08) behind Ontario (0.07) and Wang said failing oil has little effect on consumers in our province.
“It’s safe to say B.C. is pretty safe and insulated when it comes to the decline in oil and its effects on consumer habits.”
