Sean Hannity suggested President Obama is to blame for a shift in household net wealth that has made the average Canadian richer than the average American. But Hannity is ignoring the main cause of the wealth disparity, which has nothing to do with Obama: the 2008 economic crisis and the collapse of the housing market, which were well underway before Obama took office.
Report: Canadians Have Higher Average Household Net Worth Than Americans
The Globe And Mail: “The Average Canadian Household Is More Than $40,000 Richer Than The Average American Household.” In an article about the Environics Analytics WealthScapes study that found that the average Canadian household is now richer than the average American household, the Canadian newspaper The Globe and Mail reported:
Over the past five years, net worth per Canadian household has exceeded net worth per American household (total combined value of liquid and real estate assets minus debt) for the first time.
Currently, the average Canadian household is more than $40,000 richer than the average American household. (According to the latest Environics Analytics WealthScapes data, the average household net worth in Canada was $363,202 in 2011; in the U.S. it was $319,970.) And these are not 60-cent dollars, but Canadian dollars more or less at par with the U.S. greenback. Furthermore, these figures ignore public-sector (government) debt that presumably people on both sides of the border or their children will some day have to pay. Such debt is higher in the U.S. as a percentage of GDP than it is in Canada. [The Globe and Mail, 6/30/12]
Sean Hannity: Drop In U.S. Household Wealth Happened “Under Obama”
Sean Hannity Suggested Obama Is To Blame For Drop In U.S. Household Wealth. On his radio show, Sean Hannity said: “As the headline on Drudge says today, for the first time, Canadians are now richer than Americans.” He added, “that's under Barack Obama.” [Premiere Radio Networks, The Sean Hannity Show, 7/18/12]
Housing And Financial Crises That Predate Obama Administration Are Primarily To Blame For Drop In U.S. Household Wealth
U.S. News & World Report: Financial And Housing Crises “Torpedoed Home Values And Gutted Household Wealth.” Linking to the Globe and Mail story on the study, U.S. News pointed out that the combined crises that occurred before Obama took office “gutted household wealth”:
Besides a strengthening currency and a better labor market, experts credit the particularly savage fallout from the financial crisis on the U.S. economy and housing market, which torpedoed home values and gutted household wealth. According to the report, real estate held by Canadians is worth more than $140,000 more on average and they have almost four times as much equity in their real estate investments. [U.S. News & World Report, 7/18/12]
The Globe And Mail: The Biggest Reasons For Canadians' Wealth Advantage Are “The 2008 Financial Crisis And The Collapse Of The U.S. Housing Market.” In its article on the study, The Globe and Mail reported that the housing and financial crises were primarily to blame for the fall in American household wealth:
Has Canada experienced a sudden surge of productivity or entrepreneurial genius? Not exactly. Our resource sector is certainly firing on all cylinders, but the biggest reasons for Canadians' deep pockets relative to Americans' in recent years are the related phenomena of the 2008 economic crisis and the collapse of the U.S. housing market. Because house prices in the U.S. have plunged, the real estate held by Canadians is now much more valuable than that held by Americans (worth over $140,000 more on average). In fact, 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. Americans' liquid (non-real estate) assets are still greater than Canadians'. [The Globe and Mail, 6/30/12]
The Atlantic: “The Net Worth Of US Families Fell Sharply Between 2007 And 2010 Because Of The Collapse In US House Prices.” Senior Atlantic editor Clive Crook wrote that Americans lost such a great deal of wealth due to the collapse in housing prices:
The net worth of US families fell sharply between 2007 and 2010 because of the collapse in US house prices. Median net worth fell by nearly 40%; mean net worth by nearly 15%. Canada hasn't had a house price collapse (though looking at prices in Toronto makes me want to say, “not yet”). [The Atlantic, 7/17/12]
Bloomberg's Josh Barro: Canadian Households Are Wealthier Because “Canada Isn't Done With Its Housing Bubble.” Bloomberg View's Josh Barro argues that Canadians haven't seen the drop in wealth Americans have because housing prices in Canada have not collapsed as they did in the U.S.:
American home prices more than doubled from 2000 through 2006, and then cratered. Canadian home prices rose a bit more slowly, but unlike in the U.S., they have kept going up, up, up. Prices in America's 20 largest housing markets are 36 percent higher than they were twelve years ago; in Canada's 11 largest, they are up 125 percent.
The most valuable asset that the typical household owns is its home. Since Canada isn't done with its housing bubble, it's no surprise that households up north are now wealthier than those down here. Until the bubble bursts, that is.
Barro's post included this graph demonstrating the continued rise of Canadian housing prices: