The shadows of the recession made their presence felt in the last fiscal quarter here in Canada, in the form of lower household net worth.
Figures released Tuesday indicate Canadian household net worth declined by 2.1% ($134 billion) in the third quarter of 2011 to $6.2 trillion. The deterioration of household balance sheets follows the 0.3% ($19-billion) decline seen in the previous quarter that pulled net worth from the record high seen in first quarter of this year. Per capita net worth was $180,100 in the quarter, down from $184,700 in the previous quarter and $185,900 in Q1 which had marked a record high.
A report from RBC Economics points to household assets slipping 1.4% ($109 billion) in Q3 as weakness in financial asset values more than offset the continued strength from non-financial assets.
The bank also reports market value of household financial assets (equities, bonds and pension assets) fell 3.6% ($157 billion) as the S&P/TSX composite price index plunged 12.6% during the quarter. Non-financial assets provided a partial offset to this decline, rising 1.4% ($48 billion) from the levels seen in Q2/11 as Canada’s housing market strength continued to support real estate values (real estate accounts for 87% of the asset class) in the quarter.
On the other side of the ledger, total household liabilities grew by 1.5% ($24 billion) to $1.6 trillion. Credit market debt (mortgages, consumer credit and loans) growth moderated to 1.6% in the quarter, down from 1.9% in the previous period.
Tuesday's release of the National Balance Sheet Accounts, according to RBC "indicates that the federal government’s move to tighten mortgage rules earlier in the year made some headway in curbing the growth in household liabilities, which posted its slowest annual pace of accumulation since Q1/02 at 6.1% in Q3.
"That said, credit growth continues to outpace the growth of disposable income while the continued financial market turmoil has weighed on the asset side of the balance sheet, resulting in further deterioration in household leverage ratios."
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