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Canadians Richer Than Americans for First Time in Memory

Thursday, 19 July 2012 07:58 AM

Canadians are richer than Americans for the first time in recent history, Michael Adams, president of the Environics Institute, wrote in a Toronto Globe and Mail article.

Currently, the average Canadian household is $40,000 richer than the average American household, according to Environics Analytics WealthScapes data.

The average household net worth in Canada hit $363,202 in 2011, where as in the United States, the figure came to $319,970.

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Exchange rates have nothing to do with it, as the currencies trade close to par.

"These are not 60-cent dollars, but Canadian dollars more or less at par with the U.S. greenback," Adams wrote

"Furthermore, these figures ignore public-sector (government) debt that presumably people on both sides of the border or their children will someday have to pay. Such debt is higher in the U.S. as a percentage of GDP than it is in Canada."

A drop in U.S. housing prices largely pushed Canada above the United States.

"Canadians hold more than twice as much real estate as Americans and, once mortgages are factored in, have almost four times as much remaining equity in their real estate," Adams wrote.

Unlike most other major economies, Canada hiked interest rates after the global crisis and recently held interest rates unchanged at 1.00 percent, where they have stood since September 2010.

"While global headwinds are restraining Canadian economic activity, domestic factors are expected to support moderate growth in Canada," the Bank of Canada said in a statement.

"The Bank expects the economy to grow at a pace roughly in line with its production potential in the near term, before picking up through 2013."

Bank of Canada Governor Mark Carney said the country cannot assume that loosening monetary policies in other countries should require Canada to follow suit.

Canadian monetary policies are loose enough.

"We make monetary policy for conditions in Canada. Monetary policy is extremely accommodative, financial conditions are extremely accommodative," Carney told reporters, according to Reuters.

"We're in a situation where there's a very small amount of excess capacity in this economy. Rates are at 1 percent. They're very low ... Global monetary policy is not a cut and paste."

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Thursday, 19 July 2012 07:58 AM
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