Plunging stocks main factor behind net worth decline
The drop in stock market prices pushed household net worth in Canada down 4.4 per cent, an overall drop of $252 billion, in the fourth quarter.
16/03/2009 12:54:34 PM
Plunging stocks behind net worth decline |
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CTV.ca News Staff
According to Statistics Canada, on a per capita basis, household net worth fell from $179,300 in the second quarter of 2008 to $165,300 in the fourth quarter -- a loss of $14,000.
The report says the Standard and Poor's-Toronto Stock Exchange composite index ended 2008 down 24 per cent from the previous quarter.
The poor stock market results, led by significant declines in energy stocks, were a major contributor to the fourth quarter loss.
"If you take an average of the prices of commodities produced in Canada it's sitting at less than half of where it was last July," TD Bank chief economist Don Drummond said Monday.
"We export an awful lot of commodities and it's really hammered both the volumes and the values of those exports."
The report says the quarterly loss was the largest recorded since at least 1990.
Meanwhile, the total value of household assets fell 3.2 per cent in the fourth quarter.
"The turmoil on equity markets significantly reduced the value of shareholdings as well as that of pension and life insurance assets of households," says the report.
"The decline in households' assets was partially offset by the increase in non-financial assets, specifically residential structures."
Additionally, credit market debt of the household sector grew by 1.7 per cent, hitting $1.3 trillion at the end of the fourth quarter.
The increase was smaller than the 2.4 per cent growth recorded in the last quarter, mainly because mortgage borrowing slowed.
Total household liabilities relative to net worth edged up in the fourth quarter with households having 24.5 cents of debt for every dollar of net worth.
Last week, the U.S. Federal Reserve reported that American household wealth fell by $5.1 trillion in the fourth quarter of 2008, which is from October to December.
The nine per cent loss was the sixth straight quarterly decline in the U.S.
Drummond said the economy will continue to decline until the end of 2009 but there will be signs of recovery in 2010 at a "tepid" pace.
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