Showing our age by how we spend

From my recent TJ column on changing consumer spending habits in New Brunswick

Statistics Canada released a broad set of data this week on household expenditures. The recent trends in spending reveal some interesting facts about New Brunswick consumer spending habits.

Out of pocket health care costs are an increasing burden on New Brunswick households. We now spend over $930 million out-of-pocket on health care or over $1,200 per person. New Brunswickers spend nearly 16 percent more than the average Canadian on pharmaceuticals and 27 percent more on health insurance. On a per capita basis, the amount we spend on out-patient services has risen by 36 percent well above the 23 percent growth rate nationally. Overall health expenditures are rising twice as fast as overall household expenditures.

There are fewer children toddling around the average household these days so we are pouring our money into pets. In 2011 we spent $93 million on pet food up 38 percent in just five years and the money spent for veterinary services rose by 26 percent.  By contrast, per capita household spending on education rose by nine percent while increasing 21 percent across Canada. The average Canadian now spends 39 present more on education than we do.

New Brunswickers love our trucks, vans and sport utility vehicles (SUVs). We spent $552 million on them in 2011 up a whopping 57 percent from 2007 to 2011. New Brunswickers now spend well above the national average on trucks and SUVs. By contrast, household spending on new passenger cars dropped by 12 percent over the five year period. We now spend 54 percent more on trucks and SUVs than we do on cars.

Despite what you might have heard the total amount New Brunswickers spend on automobile insurance dropped by eight percent between 2007 and 2011 despite the substantial increase in household spending on trucks and SUVs. On a per capita basis, New Brunswickers spend 11 percent less on auto insurance than other Canadians.

We are still spending a lot on tobacco. In 2011, New Brunswickers spent an estimated $530 million on tobacco up 25 percent from five years ago (nationally the increase was only 10 percent). The amount spent on alcoholic beverages in New Brunswick increased by nine percent (on a per capita basis) compared to six percent across the country. Spending on games of chance (gambling) rose by 15 percent between 2007 and 2011 while declining by one percent across the country.

One of the most interesting trends relates to New Brunswick households and debt. The total amount we spend on ‘implicit loan changes’ dropped by 13 percent over the five years compared to an 11 percent increase across the country. In another release, Statistics Canada reported that New Brunswick’s household debt ratio is now second lowest among the 10 provinces in Canada.

New Brunswickers travel more in Canada than other Canadians. We spend twice as much travelling within Canada than the average Canadian but 30 percent less travelling outside Canada.

It’s hard to say for sure what is driving these changes in spending habits but it looks like we are starting to show our age. New Brunswick is the second oldest province in Canada by median age and it makes senses that our out-of-pocket health care costs are increasing rapidly, spending on pets is way up and we are trying to reduce our overall debt. The increase in travel within Canada is likely a sign that many of us are leaving the province to visit our children.

Hopefully a decade from now we will look at this data and see more spending on children relative to pets. Kids grow up into tax-paying adults. Pets do not.

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5 Responses to Showing our age by how we spend

  1. mikel says:

    Wow, really good article. The one potentially misleading figure that I can think of though is about auto insurance. I’d really like to see the year over year figure on that ‘decrease’ and know what exactly ‘spending per capita’ on insurance really means. The way its phrased makes it sound like the fairly legitimate news from CBC about auto insurance is misleading.

    Perhaps the decrease can also be explained by the aging population-fewer kids on the road, less dangerous. The older you get, the lower your rates. However, ‘averages’ can make things look one certain way when reality is very different. What we see in Canada is a widening in the gulf between rich and poor, but if you just ‘average’ those things together it makes it look like a big middle class.

  2. richard says:

    “The average Canadian now spends 39 present more on education than we do.”

    “New Brunswickers love our trucks, vans and sport utility vehicles (SUVs). … New Brunswickers now spend well above the national average on trucks and SUVs.”

    The kind of negative correlation one does not want.

  3. Oliver D says:

    I think it’s fairly easy to provide some context to some of these numbers. The increase in spending on trucks and SUVs, for example, is partly fueled by the shift towards relatively fuel efficient crossover vehicles from traditional cars. It’s not like we’re buying Suburbans and Expeditions en masse.

    The travelling in Canada is also understandable. We don’t have any large cities, but Halifax, Quebec City, and Montreal are relatively accessible and within easy driving distance for a weekend away to enjoy shopping and events that aren’t available in NB.

    As for car insurance, in my experience it has gone done incrementally over the last few years but at the same time my house insurance has soared.

  4. mikel says:

    I don’t think trucks and SUV’s are more fuel efficient than cars. Pretty sure the opposite is true, and the point is still figuring out why it would be higher in New Brunswick than the rest of Canada.
    The travel thing is a bit odd, and I’m not sure why the fact that there are no ‘large’ cities means that much more travel. People like shopping THAT much?? Is there really something you need to drive to Montreal or Halifax for that you can’t order online or find in NB?

    I think its more to the point that statistics is not an exact science, and these are complex issues. For ‘travel’, are we talking about airline travel? Well, again, averages can mess things up because if you have a small population which is travelling out west to WORK, then that’s going to create an average which makes it look like the people of NB are doing a lot of travel, when only a small group are travelling a lot.

    I suspect most people reading this blog have a similar experience with insurance, but I think that’s again the work of ‘averages’. So a smaller population is getting royally screwed with auto insurance (as the government recently discovered) but a larger group is saving more, so the ‘average’ distorts the reality.

    But at least the debt is lower, and hey, kids may grow into tax paying adults, but not necessarily in New Brunswick.

  5. Oliver D says:

    @mikel I didn’t say that trucks and SUVs are more fuel efficient than cars; I’m saying that the new crossovers are more fuel efficient than traditional trucks and SUVs, and a good portion of truck sales are now actually car-based crossovers (Escapes, CRVs, etc). Trucks and SUVs are traditionally much more popular is more rural areas, so I think that partly explains why we spend so much on them.

    As for travelling, it’s not just shopping but for things like concerts, sporting events, etc.

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