The net wealth of Canadians had its worst quarter on record.
That comes from the economics branch of RBC Royal Bank. They say declining housing prices coupled with a falling stock market trimmed nearly $1 trillion off the wealth of Canadians in the second quarter of this year.
Now, this comes on the heels of wealth gains of nearly $4 trillion through the pandemic as housing prices soared and the value of equities on the stock market roared. But all of that is over as higher interest rates are pushing home values downward and stock markets decline in the face of an impending recession.
The bank says declines like this tend to make people uncomfortable and they will start cutting back on their spending – either voluntarily or because they have to cut discretionary expenditures to service higher cost mortgages.
That spending reduction – estimated at $15 billion for next year – is the final straw that will trigger the recession and reduce the collective wealth of Canadians by another $1.6 trillion.
