Businessman Stop Domino Effect. Risk Management and Insurance Concept
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In many provinces, the majority of household wealth is tied up in financial assets that look increasingly risky, but in the provinces with lower exposure, the risks are building too, says National Bank Financial (NBF).

In a research note, NBF economists point out that recent data from Statistics Canada provides some insight into the breakdown of household assets by income group, and by province.

That data shows, in most provinces, the average household has a majority of their wealth in financial assets — only Ontario and British Columbia fall under the national average, the report shows.

This high share of household wealth in financial assets in most of the country “was driven by the record highs of the equity markets at the end of last year,” the report said — noting that this has left much of the country exposed to the recent turmoil in equity markets. 

Yet, while households in Ontario and B.C. have somewhat lower exposure to equity markets, more of their wealth is locked up in real estate, which may not be much of a safe haven either, as economic growth slows and unemployment threatens to rise. 

“For more housing-dependent provinces like Ontario and British Columbia, the recent cooling in housing activity is disconcerting,” the report said. “More heavily leveraged households in these parts could struggle should labour market conditions soften, which we increasingly view as likely.” 

Indeed, in the current environment of heightened uncertainty and growing recession risks “it seems there are currently few places to hide,” the report said. “Little wonder consumers are anxious and governments feel obliged to step up supports for vulnerable regional economies.”