According to a study released today in the Economic Analysis Research Paper Series, Canadian household net worth per capital reached 77 percent of the United States’ level in 2012.
The report compares the household net worth per capita in Canada and the U.S over this time period by using data from the Canadian national balance sheet accounts, and the Flow of Funds published by the United States Federal Reserve.
While Canadian household net worth per capita averaged 60 percent of the U.S. net worth between 1974 and 2006, the drop in U.S. home prices after 2007 reduced its net worth per capita significantly in the country. At the same time, Canadian net worth per capita unassertively declined, resulting in its net worth per capita rising to 77 percent of the U.S. net worth per capita by 2009. Here, it stayed fairly stable until 2012.
During the 1990s, however, there was an increase in the rising trend of net worth per capital in both Canada and the U.S.; the increase appearing first in Canada. The acceleration appeared more permanent in Canada, as the U.S. returned to values more consistent with those of the 1970s, 1980s, and after 2007.
The study also reports that corresponding changes in the prices of financial assets, particularly share prices, created annual net worth changes that are linked between Canada and the U.S. Non-financial assets can also largely contribute to changes in net worth between the two countries, for example, the 2007 collapse of the U.S. housing bubble. These types of factors help explain why major changes can occur in Canadian net worth per capita relative to that of the U.S.
In neither Canada nor the U.S. was household debt found to be a major source of year-to-year changes in net worth.