National Net Worth Rise Fails to Offset Per Capita Decline in Q3

The financial leverage of Canadian families increased in the third quarter, signaling a renewed strain on household balance sheets as the gap between what Canadians owe and what they earn widens further.

Statistics Canada reported on Thursday that the ratio of household debt-to-income rose to 174.8%. This represents a notable uptick from the revised figure of 173.9% recorded in the second quarter, reversing the brief stabilizing trends seen earlier in the year.

The $1.75 Reality

To put this percentage into perspective, the data indicates that for every dollar of disposable income a household has available to spend or save, they now owe $1.75 in credit market debt.

This rising metric underscores a critical vulnerability in the Canadian economy: income growth is failing to keep pace with the accumulation of debt. As households continue to lean on credit—likely driven by mortgage renewals and the high cost of living—their financial flexibility is eroding. A ratio this high suggests that a significant portion of future earnings is already earmarked for debt repayment, leaving less room for discretionary spending or savings buffers against economic shocks.

The Net Worth Paradox

The report also revealed a stark divergence regarding the country’s overall wealth, painting a “mixed picture” of national prosperity.

• Total National Net Worth: On the surface, the nation appears wealthier. The total value of national net worth saw a marginal increase, climbing to C$19.38 trillion. This suggests that asset prices, particularly in real estate and equities, are holding their ground or growing slightly.
• Per Capita Decline: However, the story changes when viewed at the individual level. Despite the aggregate rise, wealth on a per-person basis decreased. National net worth per capita dropped to C$462,747.

Diluting Prosperity

This paradox—a richer country with poorer citizens—points to a demographic disconnect. While the economy’s total value is holding steady, Canada’s rapid population growth is outpacing wealth accumulation. Newcomers and young families are entering the economy without significant asset bases, effectively “diluting” the average wealth per person.

Economists warn that this trend of declining per capita net worth, combined with rising leverage, could signal a decline in the standard of living if productivity and income growth do not accelerate to match the population surge.