National balance sheet accounts

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National balance sheet accounts note to readers

Second quarter 2008

National net worth rose 2.0% in the second quarter of 2008, as an increase in the value of non-financial assets was moderated by the rise in net foreign indebtedness. National net worth, total assets less financial liabilities, increased $111 billion in the second quarter of 2008, resulting in a per capita national net worth of $174,300, up from $171,500 in the previous quarter.

Chart H.1 National net worth continues to advance

National wealth, defined as the sum of economy-wide non-financial assets, amounted to $5.9 trillion, up 2.7% from the previous quarter. This was an increase from the 2.4% growth posted for the same quarter last year. Residential real estate accounted for about half of the gain in national wealth.

The second quarter of 2008 showed a substantial improvement in saving for the corporate sector. The expansion in corporate saving resulted from significant price driven growth in profits, particularly for energy products. Saving in the corporate sector remains a driving force behind the gains in national net worth.

Canada’s net foreign indebtedness (with tradable securities on a market value basis) increased during the second quarter following a decrease in the first quarter of 2008. Growth in Canadian liabilities to non-residents, particularly net new Canadian bond issues, exceeded growth in Canadian assets abroad. The value of foreign assets held by Canadians decreased during the quarter, as asset growth was constrained by the appreciating Canadian dollar. However, non-resident holdings of Canadian equities were up strongly during the quarter, reflecting the gains in Canadian stock markets.

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

Growth in household net worth advances

In the second quarter of 2008, household net worth expanded by 2.8%, following a 0.5% increase in the first quarter. Gains in the market value of equities were the largest contributor to the advance in household net worth, followed by residential real estate.

Household debt (consumer credit and mortgage liabilities), as a percentage of net worth, held steady during the quarter, with increases in debt offset by gains in financial assets. Households had 19.6 cents of debt for every dollar of net worth and $1.25 of debt for every dollar of personal disposable income.

Chart H.3 Household debt to income creeps up

Corporate debt-to-equity continues to trend down

Increased saving in the corporate sector translated into a further decline in non-financial private corporations’ leverage, which has trended down for most of the last 2 decades. In the second quarter of 2008, corporations had about 52.7 cents of debt for every dollar of equity (at book value). Continued generation of undistributed corporate profits has helped the corporate sector remain a net lender to the rest of the economy, a trend which emerged in the 1990’s.

Chart H.4 Corporate leverage continues to ease

Financial institutions asset growth reflects an upswing in the stock market

The portfolios of institutional investors, such as mutual funds and trusteed pension plans, benefited from an upswing in the equities market. Increases in mortgage and consumer credit holdings also contributed to the increase in financial sector assets.

Government net debt-to-GDP declines further

Government net debt declined in the second quarter of 2008. Government net debt (at book value) as a percentage of gross domestic product (GDP) edged down to just over one-third of GDP, down considerably from over 90% in the mid-1990’s.

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.