Posthaste: Canadian millionaires multiply in weirdest recession ever


Hello!

We’ve all heard how the pandemic recession was unlike any we’ve ever seen.

Now a new report claims how deeply strange this crisis has been.

The Credit Suisse Global Wealth Report, which claims to be the most comprehensive source of information on global household wealth, indicates that when it comes to global wealth, it is almost as if the worst recession in recent memory has happened. ‘was never produced.

“The contrast between what has happened to household wealth and what is happening in the economy at large has never been more striking,” the report said.

“Stranger still, the countries most affected by the COVID-19 pandemic are often those with the largest gains in wealth per adult. “

Total global wealth increased 7.4% in 2020, with wealth per adult rising 6% to a record high of US $ 79,952. This is two and a half times the average wealth in 2000.

During the 2008 financial crisis, wealth per adult fell 13.9% in the United States and 22.9% in Canada.

The reasons are clear, Credit Suisse said. Governments and central banks, keen not to repeat the mistakes of the financial crisis, quickly pumped money into businesses and individuals and cut interest rates, making it clear that rates would stay low for a while. time.

“The cut in interest rates by central banks has probably had the biggest impact,” Credit Suisse said.

Lower rates, along with unforeseen savings, have set housing markets on fire, not just in Canada, but around the world. In Russia, house prices increased by 22%, in Turkey by 31%, as well as in Austria, Canada, Czechia, Denmark, Germany, Poland and Sweden, which experienced increases of between 8% and 11%.

It was the combination of rising asset prices and the appreciation of the currency against the US dollar (the loonie was trading today at 81.33 US cents) that has boosted wealth around the world.

Canada ranks in the top 10 countries for wealth gains per adult in 2020, with Switzerland and Australia topping the list.

Another surprising feature of this recession is that the countries that have hit their GDP the most have performed disproportionately in terms of wealth growth. Credit Suisse cites Canada, Belgium, Singapore and the United Kingdom as examples.

“Although they are among the hardest hit countries, with an average loss of 7.1% of GDP, they have achieved exceptionally high wealth gains, averaging 7.7% net of exchange rate considerations. Thus, the size of the gain in wealth has exceeded the size of the loss in GDP.

The ranks of global millionaires increased from 5.2 million to 56.1 million in 2020. Canada won 246,000 millionaires, the eighth highest gain in the world.

Globally, you now need over US $ 1 million to enter the world’s top 1%.

“2020 marks the year that, for the first time, more than 1% of all adults in the world are dollar millionaires,” Credit Suisse said.

But as wealth inequality in the United States has widened, it has narrowed in Canada. Since 2007, the wealth share of the top 10% has increased from 71.6% to 75.7% in the United States, but has fallen in Canada from 57.1% to 56.5%.

Credit Suisse says one of the reasons for this is that stock prices in the United States have risen more than in Canada, thus increasing the wealth of major groups. In Canada, house prices have risen faster, increasing the wealth of the middle class.


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