Tiff Macklem: End of household debt binge will leave $50bn gap in the economy

Bank of Canada Deputy Governor Tiff Macklem, the favourite candidate to replace Governor Mark Carney when he takes off for England in the Spring, is speaking right now at Queen’s University in Kingston, Ont.

Below is the integral text of his remarks, and here are a few pointers:

• We can’t count on the housing market and overstretched consumers to keep propelling economic growth.
• Eliminating Canadians’ private net debt the household sector’s deficit alone would leave a $50bn gap in the economy.
• What’s going to help us plug the hole? Our traditional engine of growth, exports, has been underperforming for over a decade.
• Two-thirds of this is because we’re exporting to the wrong markets (too much of the U.S., too little of the emerging economies), but one-third is also because we’ve become less competitive. Even in the U.S. market, we’ve lost market share.

The Deputy Governor, of course, doesn’t sound nearly as gloomy as the bullet points would have you believe. After all, he notes, we have a small fiscal federal deficit, a healthy financial system, a great reputation among foreign lenders, and lots of natural resources and educated people. Still…