Facts, Facts and More Facts: Financial Wealth Growth Stalls in the Second Half of 2011; Deposits Shine

The financial wealth of Canadian households decreased marginally in the second half of 2011 (by 0.7%) but remained above the $3 trillion mark. The growth was a tale of two quarters. The third quarter equity market retrenchment adversely affected the valuations of the market-sensitive component, leading to a 2.5% reduction in financial wealth. The fourth quarter saw an expansion of 1.9% with markets cautiously moving forward. For the year, financial wealth was 0.7% ahead. The longer-term view reveals a stronger growth pattern of 8.8% on an annul basis since the cyclical low of 2008.

At $35 billion, net inflows into financial wealth in the second half of 2011 remained robust, just shy of the $39 billion recorded in the first half of the year. Negative and volatile equity market environment led to renewed interest in deposits. Outstanding balances in deposits advanced by 3.8% in the second half of the year on strong inflow activity, with premium savings accounts the hotbed of activity. For more information concerning the financial wealth market, please see 2011 Household Balance Sheet Report http://investoreconomics.com/issue/household-balance-sheet-report-3 and Share of Wealth Market Report. Posted by Travis Young, travis@iei.ca.