The release of the BC Budget Second Quarterly report notes an increase in the projected budget deficit to $1.5 billion, up from $1.1 billion when the beans were first counted back in September. The growing deficit, amid a soft economy, is bound to get plenty of media attention. But this blog post is not about that deficit; it is about a couple other deficits that are not much spoken of. I’m drawing on data just released for the BC Economic Accounts, which have been revised back to 2007 as well as including the 2011 data for various components of GDP. A change in methodology makes comparisons harder going back to 2007, and these historical revisions will be released next year, so in what follows I’ll stick to the 2007 to 2011 period.
Second deficit: BC’s trade deficit has become huge, rising to $17.6 billion in 2011 from $9.5 billion in 2007. Historically, BC ran a trade surplus with the rest of the world and a trade deficit with the rest of Canada. In recent years, we have run deficits on both fronts. From a minute deficit with other countries in 2007, BC’s international trade deficit was $5.6 billion in 2011 – about one-quarter of Canada’s total trade deficit that year. Within Canada, BC’s trade deficit hit $12 billion in 2011 – this interprovincial deficit is far larger than any other province.
Third deficit: a range of indicators shows how BC households are piecing together their livelihoods with debt. BC as a whole had a negative savings rate (savings as a percent of disposable income) of 4.2%. Canada as a whole was almost a mirror image of BC, with a positive savings rate of 3.8%. PEI and Nova Scotia were the only other Canadian provinces to register a negative savings rate. Debt service payments accounted for almost one dollar out of every ten dollars in disposable income in BC (9.6%), the highest debt service burden for households in Canada (national average of 7.6%). At least that ratio has dropped somewhat since 2007, when debt service ate up 10.9% of BC disposable income.
The new economic accounts also have some interesting breakouts that shine a light on BC’s household debt service payments. On a per capita basis, mortgage interest in BC was $1,644 per person, highest in Canada by a long shot (national average of $1,133), while BC’s non-mortgage interest was above average but by a huge margin ($1,158 in BC vs $1,109 for Canada). No surprise there, given the cost of housing, but still significant, especially given the large numbers of British Columbians who cannot even get into the housing market so are not carrying a mortgage.
BC’s per capita household disposable income grew about 8.5% total between 2007 and 2011 (and only 2.4% total after adjusting for inflation). Compared to the rest of the country, this is somewhat less than average ($28,395 per person in 2011, compared to $28,820 for Canada).
[Update note: Original version of this post cited per capita mortgage and non-mortgage debt rather than debt service (interest paid on debt). Apologies for any confusion.]