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    Poverty Declines in Canada, Gap Shutters, and Banks Record Loan Losses

    Good News for your Monday

    This week, Stats Canada announced that fewer Canadians are living under the official poverty line* than ever before. That’s huge.

    What’s even better? Using data from 2017, Stats Canada found that 278,000 fewer children are living under the poverty line than in 2015.

    Analysts have attributed the overall decline to two factors:

    1. The economy is on a slight upswing in terms of employment. While our employment numbers aren’t quite as high as they were prior to the economic crash in 2008, they’re slowly rising.
    2. The Canada Child Benefit (CCB), a tax-free federal benefit distributed to families, was introduced in 2017. Depending on income factors, families can receive up to $6,400 per child. Expect to hear about the CCB a lot come October: lifting children out of poverty was a core tenet of the Liberal’s platform, and every incumbent loves a heartwarming story about fulfilling their campaign promises.

    The bottom line from their figures? Poverty and childhood poverty rates in Canada are on the decline. While that’s great news, it doesn’t mean economic hardship has ceased to exist in our country. The 2017 numbers indicate that 9.5% of our population still lives below the poverty line.

    Let’s hope that the parties in our electoral system haven’t forgotten about that 9.5% by the time October rolls around. Here at Btchcoin, we’re eagerly anticipating policy proposals that will substantially tackle all types of poverty. We want to hear about affordable child care, tax reform, pharmacare, and housing. Until then, we’ll keep you in the loop.

    *The poverty line is $22,133 for a single person or $38,335 for a family of three

    Poverty Rates in Canada by Age Demographic
    Credit: CBC News & Statistics Canada

    Goodbye EARL The Gap Inc.

    Last week, Gap Inc. announced their plans to shut down operations of nearly half of their stores in the coming two years – a whopping 230 locations worldwide. It’s speculated that many of these locations will be in Canada.

    In an email to CBC, the San Francisco-based retail giant explains that these closures are a result of their commitment to shutter underperforming stores, and follows a mass cull of 175 locations by the company in 2015.

    These closures come at a significant cost to Gap Inc. – projections indicate that the company will see a loss of approximately $635 million USD, but will ultimately result in $90 million USD in pre-tax annual savings following these operational changes.

    Although the Gap Inc. is currently unwilling to state the exact number of Canadian closures, this cut-throat move is sure to have a notable impact on Canada’s clothing retail environment, an industry it has staked a significant claim in since it entered the Canadian market in the late 80s.

    It’s not just The Gap that’s tapping out – retail really isn’t looking too rosy for Canada right now.

    Gap Inc.’s announcement comes on the heels of the Hudson’s Bay Company’s decision to shut down all of its 37 Home Outfitters locations across the country, and news that Payless ShoeSource is exiting the Canadian market. Sears has been shutting storefronts across the country since 2017, and Town Shoes will also be closing shop at all of their nearly 60 locations across Canada.

    The slumping Canadian retail sector witnessed a considerable dip in consumer spending last year, which has impacted Gap Inc. and other large retailer’s operations in the country. The drop in retail sales are a result of the low gasoline prices and fewer purchases of automobiles, plus the impact of rising interest rates on significant consumer expenditures, such as houses and real estate.

    Gap’s future in Canada may be uncertain, but we can tell you we will CERTAINLY always think fondly of the brand that gave to the world some seriously iconic celebrity ad campaigns, repopularized turtlenecks, and gifted us with the unforgettable brightly coloured G-A-P hoodies of the 90s (ALL the rage on the playground back then).

    Interestingly, the Zuck did not wear his Gap hoodie to the congressional hearings last year

    Housing is more Affordable… but like still Unaffordable

    We’ve talked about Canadian banks before, and specifically about the buzz around one hedge-fund’s decision to bet against Canadian banks, which are typically perceived to be a stable, relatively safe investment.

    The hedge fund’s decision largely centred around the high level of household debt Canadians have, and fears that some may default on their mortgages or other loans.

    This week, two of Canada’s largest banks, TD and CIBC, released first-quarter results that included higher than anticipated provisions for loan losses. Loan losses = The amount they have to cover for loans that their customers (either corporate or personal) cannot pay back.

    Do loan losses indicate the ‘tip of the iceberg’ in terms of a potential wave of future Canadian defaults? No, not necessarily.

    Both TD and CIBC lend in the US and Canada, meaning the losses are spread across the two countries. In addition, the losses could be seasonal: first quarter results typically reflect holiday spending, and we all know how terrifying our credit card statements can be in the New Year…


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