Canadians should expect to see considerably slower gains in wealth in the next two years, limiting their ability to spend, according to a new report from TD Economics.

The report, authored by Craig Alexander, vp & deputy chief economist and economist James Marple, says consumer spending will slow from a more than 5% annualized rate of increase in early 2008 to about 2.6% in 2009.

Canadians have been able to spend “almost like drunken sailors” over the past two years because high commodity prices have brought great wealth into the country, the report says.

But most factors point to lower household wealth gains in the next couple of years, including stabilizing commodity prices, lower house price increases and higher unemployment.

The bank said that nominal gross domestic product, which includes inflation, will fall from 5.9% in 2007 to 4.1% this year and 3.5% in 2009.

Real GDP, which adjusts for the impact of inflation, is also slowing from 2.7% in 2007 to 1% this year, before recovering somewhat to 1.8% in 2009.

“All of the stars appear to be aligned for weaker consumer spending, but not a major downturn,” the report concludes.