Canadians could see their collective net wealth accumulated during the pandemic drop by $1.6 trillion, RBC said.
The downturn in the real estate and financial markets means Canadians could see a total of $1.6 trillion in net wealth erased in the coming quarters, the bank said in a report released on Wednesday. While that won't wipe out all of the estimated wealth gains made during the pandemic, it's already having a chilling effect on consumer spending."Still, for the most part, the sharp decline in net wealth is starting to hit home," the report said.
Economists commonly refer to this phenomenon as the wealth effect, meaning when an individual simply perceives themselves to be richer because of higher asset values, they're more inclined to spend money. The opposite is true when individuals feel less wealthy.