A recent study reports that our neighbors to the north are now more wealthy than their American counterparts. Others shrug, however, and ask, “what’s new?”
Average net worth
The study, released by Environics Analytics WealthScapes, concluded that the average Canadian has a net worth of $363,202, as contrasted to the $319,970 held by the average American consumer. That is a more-than-significant difference of over $42,000.
Canadian author Stephen Marche wrote in Bloomberg:
“On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news. For the first time in recent history, the average Canadian is richer than the average American.”
Canadians also have a leg-up on Americans in the employment department. The Canadian unemployment rate is 7.2 percent and falling. The rate in America continues to hover stubbornly at 8.2 percent, hindering further economic growth.
Exchange rate not the culprit
The reason for the difference has nothing to do with exchange rate, as some may suspect. In recent years, the Canadian dollar has caught up with its counterpart south of its border.
Michael Adams of the Globe and Mail wrote:
“These are not 60-cent dollars, but Canadian dollars more or less at par with the U.S. greenback.”
Housing crisis blamed
Much of the reason the economy is faring better in Canada than in the U.S. is because it did not suffer the full brunt of the housing crisis, which drove U.S. housing prices into the ground.
Brian Williams of NBC reported:
“One big factor in Canada’s favor, home prices held up there better after the financial meltdown here.”
According to the report, the average Canadian home is now worth about $140,000 more than the average U.S. domicile. Plus, Canadians have, on average, quadruple the equity in real estate investments.
‘Hope and despair’
Marche wrote that the American system is failing because of its struggle to rise out of its economic crisis. Efforts, he says, that have been hampered by “a political sine curve of hope and despair.”
“The Canadian System is working. The American system is not.”
Low-balling Canadian advantage
Dylan Matthews, in the Washington Post, however, challenged Marche’s claim that the imbalance is anything new. He says the study, if anything, “low-balls Canadians’ wealth advantage.”
Matthews looked at the data before the financial crisis in the U.S. and found that Canadians had the advantage then, too.
Further, according to Matthews, Americans lose out to many nations when it comes to personal wealth.
“Not only does Canada beat the United States on median net worth. Just about every developed country, save Sweden and Denmark, does. The UK, Japan, Italy and Australia [all have] more than double the U.S. median.”