Household Balance Sheet 2010 Update and Rebased Forecast

In mid-2009, as Canada was slowly recovering from a painful recession, we published our Household Balance Sheet Report. The study presented a cautious and mildly optimistic outlook for the financial services industry, and discussed the changes we might see in the balance sheet of savers, investors and borrowers in Canada. We issue an update and rebased forecast on the one-year anniversary of this biennial report. Sometimes it is ho-hum, with little change. Not this year! Contrary to our expectations (and we were not alone), the wealth market has made a strong recovery to the point that the nearly $270 billion in household wealth that was lost in 2008 was fully recovered in 2009. While buoyant equity markets provided some support, the recovery was also strong in conservative and traditional balance sheet categories such as deposits and residential real estate. But if the asset side of the household balance sheet gained strength, some of the benefits to the total net worth were offset by record levels of household debt, driven to a great extent by record low interest rates and tax breaks that formed part of the government stimulus initiatives. If you are a subscriber to Investor Economics’ Household Balance Sheet Report you have automatically received a full update and rebased forecast package. If you are not yet a subscriber and want to know what happened in 2009 and what may happen over the next eight years, let us know.