Canadians amassed $3.9 trillion in net wealth during the pandemic, largely due to a real estate boom that drove home values 52 per cent higher, but in a sharp reversal, roughly $900 billion of that has been lost as housing markets retrench under the weight of rising interest rates and weakening financial markets, says a report released Wednesday by RBC Economics.
“And the pain isn’t over. We expect losses to net wealth to total $1.6 trillion in quarters ahead, leaving Canadians feeling less wealthy and less confident about spending,” said the report.
“The dramatic decline in net wealth, combined with rising prices and higher interest rates, will cut roughly $15 billion from household spending in 2023. This is one of the factors that will drive Canada into a recession early next year.”
RBC said the decline in household wealth will come at a time when Canadians are already feeling the squeeze of higher inflation and rising interest rates.
“This is particularly the case for Canadians at the lower end of the income scale, who spend a larger share of their earnings on “non-discretionary” or essential purchases like gas, food, and shelter. By contrast, higher-income households—still exercising pent up demand following pandemic lockdowns—have continued to spend on non-essentials like travel and hospitality services. This has kept overall spending strong and added to inflation pressures,” it said.
“Discretionary or non-essential spending on things like home furnishings and renovations drove the pandemic spending surge. But as interest rates rise and price pressures persist, Canadians will increasingly prioritize necessities like groceries and gas—and debt. We estimate households will soon have to allocate 15 per cent of their take-home pay just to debt servicing, with half of this attributed to mortgage costs.”
Mario Toneguzzi is a veteran of the media industry for more than 40 years and named in 2021 a Top Ten Business Journalist in the world and only Canadian)
About Us
Canada’s Podcast is the number one podcast in Canada for entrepreneurs and business owners. Established in 2016, the podcast network has interviewed over 600 Canadian entrepreneurs from coast-to-coast. With hosts in each province, entrepreneurs have a local and national format to tell their stories, talk about their journey and provide inspiration for anyone starting their entrepreneurial journey and well- established founders.
The commitment to a grass roots approach has built a loyal audience with over 120,000 downloads and thousands of subscribers on all our social channels and YouTube.
Canada’s Podcast is proud to provide a local, national and international presence for Canadian entrepreneurs to build their brand and tell their story.
Advertising and Sponsorships:
At Canada’s Podcast we are here to help you reach your communication objectives and get you results. If you are looking to build your brand, promote your products/services, announce an event, then you will want to reach our extensive data base of owners and entrepreneurs. Contact sales at: robert@canadaspodcast.com and find out how we can make an impact on your bottom line with our sponsorship packages.
Sponsors include: RBC Bank, The Cooperators Insurance, Silicon Valley Bank, eBay, Lethbridge Economic Development, VanHack, CBC Dragon’s Den, The Competition Bureau, The Vancouver Board of Trade and more.