06:37 AM EDT, 10/18/2024 (MT Newswires) -- Firmness in United States retail sales has flown in the face of the

aggressive tightening cycle, while spending in Canada has

been under real pressure -- a pretty stark contrast, especially

when considering the explosion in the Canadian population, said Bank of Montreal (BMO).

Indeed, in per-capita terms, retail spending has maintained

a solid growth clip in the United States while contracting outright in

Canada since early 2022, noted the bank.

The widening of that performance gap neatly coincides with the start of the tightening cycle.

To put it briefly, Canadians are more levered in terms of household debt relative to disposable income, stated BMO. It recalled that

US households spent a decade deleveraging after the financial crisis, while Canadians continued to borrow more.

The sensitivity of that debt to higher interest rates is arguably higher in Canada, where mortgages are steadily

rolling into higher rates, according to the bank.

This isn't meant to be "alarmist" -- sound lending standards and

stress tests are real factors, added BMO. But, Canadians are going to pay that mortgage first, leaving potentially fewer trips to the

mall/restaurant/travel agent.