National balance sheet accounts

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National balance sheet accounts note to readers

First quarter 2008

Though down slightly from the previous quarter, growth in national net worth remained robust due mainly to steady gains in non-financial assets. National net worth - total assets less liabilities - grew 1.2% or $68 billion in the first quarter of 2008. This resulted in a per capita national net worth of $171,000, up from $169,300 at the end of 2007.

Chart H.1
Growth in national net worth continues at a strong pace

National wealth, defined as the sum of economy-wide non-financial assets, rose to $5.7 trillion at the end of the first quarter 2008. This was a modest increase of 1.2% compared to 2.3% registered for the same quarter last year. Although housing investment cooled during the quarter, residential real estate remained a major contributor to the increase in national wealth, accounting for over one third of the gain.

Sustained saving by both the corporate and government sectors remained a driving force behind the gains in national net worth. Canada’s net foreign indebtedness (with marketable securities on a market value basis) has trended downwards over the last number of years, although it edged up in the first quarter, primarily due to a stock market correction on Canadian portfolio investments abroad. However, this small increase was offset by the widening of Canada’s net foreign direct investment asset position as well as by the depreciation in the Canadian dollar, which raised the value of Canadian foreign security holdings. As a result, the gain in national net worth was only marginally constrained by the increase in Canada’s net foreign debt.

Chart H.2
Revaluations of assets drive continued increase in national net worth

Household net worth expands

Household net worth expanded by 0.4% in the first quarter as increases in financial and non-financial assets outpaced growth in liabilities. Growth in life insurance and pension assets offset the decline in equities, the latter resulting from a decline in the financial stock markets.

Despite declines in new housing construction and resale markets in the first quarter, residential real estate continued to expand, though at a reduced pace. The value of residential real estate further buttressed the growth in non-financial assets.

Household debt (consumer credit and mortgage liabilities) continued to grow faster than net worth in the first quarter 2008. Households had 19.6 cents of debt for every dollar of net worth and household debt amounted to 123.8% of personal disposable income.

Chart H.3
Household leverage up further

Chart H.4
Household debt to income edges up

Non-financial corporate debt and leverage largely unchanged

Increased reliance on borrowed funds in the first quarter was reflected in a marginal increase in leverage. Corporations had about 54 cents of debt for every dollar of equity in the first quarter. However, leverage has been trending downward for corporations since the early nineties, partially spurred by the trend to increased undistributed corporate profits.

The corporate sector remained a net lender to the rest of the economy, as corporations continued to generate more funds (undistributed corporate profits) from internal operations. Non-financial corporations’ surplus advanced, as gross saving outpaced non-financial capital acquisition.

Chart H.5
Corporate debt-to-equity posts a modest increase

Asset growth of financial institutions accelerates

In aggregate, financial institutions significantly increased financial assets in the first quarter, principally reflecting increases in corporate claims and mortgage holdings. The upward revaluation of foreign currency denominated investments resulting from the depreciating dollar also contributed to the growth in financial assets.

Government net debt continues to decline in relation to gross domestic product

As a percentage of gross domestic product (GDP) government net debt further declined, representing about 40% of GDP compared with 90% in 1996.

Statistical tables

• Table H.1 National balance sheet accounts
• Table H.2 National balance sheet, market value
• Table H.3 Credit market summary table

Information on methods and data quality available in the Integrated Meta Data Base: 1806.