Not Income level, Net Worth of Average Canadian is higher by 7%

Today, when landing in a job is just as tough as it was earlier and the pay packets as small as earlier, it is difficult for a common man to agree that the recession is over.

Therefore, when Rob Gerlsbeck, in his magazine says that the net worth of the Canadians was better, at about eight percent higher than what it was at the beginning of the decade,  it may not find many takers.

While Gerlsbeckwas quick to concede that the wealth of most Canadians has been hit by the recession, particularly with the huge stock market investment losses most have experienced in the last two years, he added that between 2007 and 2009, average Canadians' wealth has fallen [only] 10 per cent in that two-year period.

Net worth is the value of all one owns; RRSPS, investments, vehicles, home, equity; subtracted by all debts, including mortgage, loans, and credit card balances. This net worth, adjusted by inflation, and despite ten percent decline in 2007-08 is still seven per cent higher than in 2000.

Though income levels in Canada have not registered substantial gains in this period, the growing awareness among Canadians to save has contributed to this growth in Net Worth.  Also during this period, the value of real estate has registered an impressive net increase, which also contributes to increase in net worth.

 Gerlsbeck cautioned that while Canadians should save at least 10 percent of their income, an average Canadian has tendency to borrow higher than high capacity to repay. He insists that though under Harper regime last year, over 500,000 Canadian have lost jobs or can't find work, Canada was not headed into recession.

However, not every body is convinced that the growth in net worth is real. They argue that, what do you do after you have zero interest rates and you have flooded the world with money and credit? The growth in net worth due to real estate is due to flooding of money with cheap credit. The official debt responsibility for the US is more than $23 trillion, about 40% of world GDP.

These banks may most likely demand another stimulus package of some $2 trillion to keep zero interest rates and perhaps go to negative rates.

If this happens, this may pave way for another Planned Collapse in the Canadian economy.