The wealth gap widened in the second quarter, as the richest households captured most of the gains in financial assets, and savings for middle-class households declined, according to new data from Statistics Canada.
The national statistical agency reported that income inequality increased in Q2, as the gap in the share of disposable income captured by the top 40% of households, compared with the bottom 40%, reached a record level (since StatCan began collecting the data in 1999) of 47 percentage points.
The highest-income households (the top 20% of the income distribution) recorded the largest increase in their share of disposable income compared with the other segments of the distribution, StatCan reported.
High-income households also had the largest increase in savings in the second quarter, it noted, whereas savings by middle-income households deteriorated as the cost of expenses such as housing and utilities outpaced income gains.
Alongside growing income inequality, the wealth gap widened too, as the disparity in wealth between the top 20% and the bottom 40% increased to 64.9 percentage points — with the top 20% holding 67.7% of total wealth, averaging $3.4 million, compared with just 2.8% for the bottom 40%.
Across the wealth distribution, the average value of financial assets gained 5.3%, offsetting a 2.0% decline in the value of real estate. The wealthiest households had 58.5% of their assets in financial assets, compared with 28.6% for the least wealthy, StatCan noted.
Driven by these gains in financial assets, and only modest debt additions, the wealthiest 20% of households also increased their net worth at the fastest pace of any group, it said.
Overall, household debt continued to grow in the third quarter, StatCan said.
“As high interest rates and housing cost pressures persist, households may be further strained in their ability to make ends meet without going further into debt, although recent reductions in borrowing costs may provide some measure of relief going forward,” it said.