Distributions of household economic accounts for income, consumption, saving and wealth of Canadian households, first quarter 2024
Released: 2024-07-17
Although income and wealth inequality widened in the first quarter of 2024, some economic well-being indicators for lower- and middle-income households as well as younger households less than 45 years old improved for the first time in three years.
Income gap widens to highest rate since 2008 as debt charges weigh on lower- and middle-income households
Income inequality increased in the first quarter of 2024 as the gap in the share of disposable income between households in the top 40% and the bottom 40% of the income distribution was the largest since 2008.
Increases in interest rates in 2023 had varying impacts on household finances, depending on level of income. While higher interest rates can lead to increased borrowing costs for households, they can also lead to higher yields on saving and investment accounts. Lower income households are more likely to have a limited capacity to take advantage of these higher returns, as on average they have fewer resources available for saving and investment.
The lowest income households (bottom 20% of the income distribution) had above-average gains in disposable income in the first quarter of 2024 relative to a year earlier. Strong wage gains for the lowest income households (+24.6%) more than offset increases in interest payments on mortgages and credit cards (+20.8%), which are netted out of investment earnings as part of disposable income. Wage gains for the lowest income households were derived mainly from those working in professional and personal services; transportation; as well as mining, oil and gas extraction.
While the lowest income households held their share of income stable in the first quarter of 2024, those within the middle 60% of the income distribution decreased their share by 1.0 percentage points from a year earlier. Interest rates had a more significant impact on the disposable incomes of middle-income households as their wage gains did not keep pace with higher interest payments.
Chart 1
Change in average disposable income for lowest income quintile, including contribution of each income component, first quarter of 2024 relative to first quarter of 2023
Highest income households gain the most from investments
Average disposable income for the highest income households (top 20% of the income distribution) increased at a faster-than-average pace in the first quarter of 2024 relative to a year earlier (+7.7%), as gains in investment earnings were far greater than increases in interest payments.
Chart 2
Change in average disposable income for highest income quintile, including contribution of each income component, first quarter of 2024 relative to first quarter of 2023
Lower- and middle-income households improve net saving for first time in three years
Households across income groups improved their average net saving in the first quarter of 2024 relative to a year earlier as cost-of-living pressures generally eased. While the highest income households had the largest increase in net saving in the first quarter of 2024 relative to a year earlier (+$1,657), net dis-saving for lower- and middle-income households declined for the first time in three years as income gains exceeded increases in spending. Higher expenditures related to housing and utilities, however, continued to outpace income gains for most households.
Chart 3
Average household net saving by income quintile
Wealth gap widens as financial asset gains benefit wealthiest
Most wealth is held by relatively few households in Canada. The wealthiest (top 20% of the wealth distribution) accounted for more than two-thirds (67.6%) of Canada's total net worth in the first quarter of 2024, averaging $3.4 million per household, while the least wealthy (bottom 40% of the wealth distribution) accounted for 2.8%, averaging $70,356.
The gap in wealth between the top 20% and the bottom 40% reached 64.8% in the first quarter of 2024, an increase of 0.3 percentage points over the same quarter of the previous year. For households across the wealth distribution, a gain in the average value of financial assets (+5.3%) counteracted a reduction in real estate values (-0.7%). More than half (58.4%) of asset holdings for the wealthiest were financial assets, compared with 28.8% for the least wealthy.
Least wealthy have weakest net worth growth as mortgage debt offsets real estate gain
Although the least wealthy held and acquired real estate, their average net worth was relatively unchanged in the first quarter of 2024 compared with a year earlier (+1.0%), as the increase in mortgage debt to finance those assets (+3.5%) offset the increase in the value of their real estate holdings (+1.8%).
In contrast, the wealthiest increased their net worth at the fastest pace of any household group (+3.0% vs. +2.5% for all households), derived mainly from financial asset gains (+5.8%). The average value of real estate for the wealthiest declined by 1.3% over the same period, about the same rate as the average household. Meanwhile, the wealthiest avoided higher levels of borrowing as their debt grew slightly (+0.6%).
Chart 4
Change in average net worth for lowest two wealth quintiles, including contribution of each wealth component, first quarter of 2024 relative to first quarter of 2023
Youngest households continue to de-leverage from mortgage debt amid ongoing affordability concerns
The youngest households—those under the age of 35 years—were the only age group to continually decrease their mortgage debt balances since the end of 2022, as rising interest rates and inflationary pressures made owning a home less affordable. Average mortgage debt for the youngest households continued to decline, albeit at a slower pace, as the year-over-year decrease for the first quarter of 2024 (-3.7%) was lower than for the previous two quarters (-3.9% for the fourth quarter of 2023 and -4.9% for the third quarter of 2023).
Households in the youngest age group may be reducing their mortgage balances for various reasons. Prospective homeowners may be turning away from the housing market due to affordability concerns, while existing homeowners who purchased a home when interest rates were much lower a few years ago may be paying off their existing mortgage debt balances or moving into more affordable accommodations. As well, others may be receiving financial support from family to help them cope with the cost of living and reduce their debt obligations.
Chart 5
Change in average household mortgage debt by age group of major income earner
Households in younger age groups reduce debt-to-income ratios for first time in three years
For the first time in three years, the debt-to-income ratio declined for younger age groups as income gains, mainly due to wage increases, exceeded debt increases. Households with a major income earner aged 35 to 44 years had the highest debt-to-income ratio of any age group, at 264.2% in the first quarter of 2024, down from 268.4% a year earlier, while those less than 35 years old decreased their ratio by 25.0 percentage points. Households whose main income earner was aged 65 years and older decreased their ratio by 2.0 percentage points as they benefitted from higher investment earnings.
Chart 6
Debt-to-income ratio by age group of major income earner
An alternative indicator of household financial risk is the interest-only debt service ratio (DSR), which is based on the value of total interest payments on credit market debt as a share of household disposable income. The interest-only DSR was highest for those aged 35 to 44 years, reaching a record high of 12.4% in the first quarter of 2024 (+1.0 percentage points from the first quarter of 2023).
Due to strong gains in average income and significant reductions in debt for those aged less than 35 years, in tandem with stabilizing inflationary pressures and interest rates, the interest-only portion of the DSR for the youngest households declined for the first time in three years.
Renters less able to generate saving and wealth due to lower incomes and limited property ownership
Renters tend to have lower incomes than homeowners, which limits their ability to manage increases in the cost of living. Renters had an average disposable income of $14,867 in the first quarter of 2024 (+4.2% from the first quarter of 2023), compared with $27,994 for homeowners (+5.5%).
In the first quarter of 2024, renters spent 33.3% of their income on housing (+0.9 percentage points from the first quarter of 2023), significantly higher than the share for homeowners, at 22.8% (+0.4 percentage points). Renters' lower incomes and higher allocations of income to housing costs make it more difficult for them to make ends meet, and to save for such things as a downpayment on a home. In the first quarter of 2024, homeowners had net saving of $2,835 (+43.2% from the first quarter of 2023), while renters had net dis-saving of -$707 (+24.5%).
Renters also face barriers in their ability to generate wealth due to limited property ownership. Homeowners accounted for 91.0% of all wealth in the first quarter of 2024, due equally to real estate and financial asset holdings.
Over time, homeowners' ability to generate wealth, as measured by the net worth to income ratio, increased from 1,112.9% in the first quarter of 2020 to 1,227.8% in the first quarter of 2024 (+114.9 percentage points). Over the same period, renters' net worth as a share of income grew at less than half the pace of homeowners (+54.7 percentage points).
Persistently high interest rates and inflation are likely to continue to strain vulnerable households' ability to make ends meet without going further into debt. The latest figures from the Monthly Credit Aggregates program indicate that household debt continued to increase up to April 2024, although there was a continued slowdown in mortgage borrowing as interest rates and significantly increasing home prices likely dissuaded buyers.
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Sustainable Development Goals
On January 1, 2016, the world officially began implementation of the 2030 Agenda for Sustainable Development—the United Nations' transformative plan of action that addresses urgent global challenges over the next 15 years. The plan is based on 17 specific sustainable development goals.
The distributions of household economic accounts for income, consumption, saving and wealth of Canadian households are an example of how Statistics Canada supports the reporting on the Global Goals for Sustainable Development. This release will be used in helping to measure the following goal:
Note to readers
Statistics Canada regularly publishes macroeconomic indicators on household disposable income, final consumption expenditure, saving and wealth as part of the Canadian System of Macroeconomic Accounts (CSMA). These accounts are aligned with the most recent international standards and are compiled for all sectors of the economy, including households, non-profit institutions, governments and corporations along with Canada's financial position vis-à-vis the rest of the world. While the CSMA provide high quality information on the overall position of households relative to other economic sectors, the Distributions of Household Economic Accounts (DHEA) provide additional granularity to address questions such as vulnerabilities of specific groups and the resulting implications for economic well-being and financial stability. These estimates are an important complement to standard quarterly outputs related to the economy.
The DHEA estimates released today provide estimates of income, consumption, saving and wealth, including their sub-components by various household distributions up to the first quarter of 2024. Estimates have also been revised for prior periods to incorporate the latest CSMA benchmarks, including revisions back to the first quarter of 2023 for the income, consumption, saving, and wealth series.
The term "income gap", referred to in this text, is defined as the gap in the share of disposable income between households in the top 40% and bottom 40% of the income distribution. The "wealth gap" is defined as the gap in the share of net worth between households in the top 20% and bottom 40% of the wealth distribution. Estimates for net worth distributed by wealth quintile are combined for households in the lowest two quintiles for ease of illustration, since the average household in the lowest wealth quintile owed more in liabilities than it owned in assets, such as self-employed workers with negative net business equity and recent graduates with student loan balances.
As with all data, the DHEA estimates are not without their limitations. While some distributions are estimated using timely microdata or micromodels, such as wages and salaries and household debt, other distributions, including those for household final consumption expenditures, social transfers in kind and assets rely on assumptions or use data from prior reference periods. Users should keep these limitations in mind when analyzing the estimates included in this release.
All values are expressed in nominal unadjusted rates. As a result, the estimates presented in this release are not adjusted for variations over time that may occur due to seasonal patterns and/or price inflation. Since the quarterly series are not seasonally adjusted, comparisons should only be made using estimates for the same quarter of each year.
Next release
Data on the Distributions of Household Economic Accounts for the second quarter of 2024 will be released on October 10, 2024.
Products
The data visualization product "Distributions of Household Economic Accounts, Wealth: Interactive tool," which is part of Statistics Canada – Data Visualization Products (71-607-X), is now available.
The article "Distributions of Household Economic Accounts, estimates of asset, liability and net worth distributions, 2010 to 2023, technical methodology and quality report," which is part of the Income and Expenditure Accounts Technical Series (13-604-M), is also available.
Details on the sources and methods behind these estimates can be found in Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X). See section "Distributions of Household Economic Accounts" under Satellite Accounts and Special Studies.
The Economic accounts statistics portal, accessible from the Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
Contact information
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