Deeply disturbing underlying trends in Canadian retail sales data

Looking at new Canadian retail sales data one would be forgiven for thinking that all is well on the retail front: yes we had a downward blip, but we have stabilised and things seem mildly resurgent in the year to August.

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But just as in the US, Auto sales appear to be driving the headline growth rate, which if you have been keeping an eye on my US data missives should give pause for thought:

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So is this not necessarily a good thing?  We know that consumer debt has been on the rise and now stands at historical levels:

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And recent independent commentary has also pointed out the large increase in auto related debt: When will Canada’s subprime car loan bubble burst?

But the clincher is the relationship between sales of motor vehicles and parts and wage growth: the following chart looks at annual rates of changer over rolling 5 year periods to average out short term ups and downs, to get a better look at the strength of the data relationships:

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As we can see, auto related spending has taken a manifold hyper leap relative to the rate of change of employee wage growth.   This is all deeply disturbing. 

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