Our neighbors to the north have just lurched into the lead. That’s right, the Canadian household is officially more prosperous than the U.S. household.
According to a study by Environics Analytics, the average Canadian household is worth $363,202, compared to $319,970 for U.S. households.
Canada’s nouveaux riches can attribute their newfound(land) success to three trends.
Many American homes are a shadow of their former glory.
U.S. house prices plummeting. Since the black eye sustained during the financial crisis in 2008, U.S. housing prices have failed to rebound. They were vastly overvalued in the beginning of 2008, so it’s probably a good thing that prices haven’t soared back in cartoonish fashion. America needs to start producing valuable, exportable goods instead of riding a balloon house all the way to the bank.
An oil refinery in Edmonton at dusk.
Commodity prices rising. America imports a lot of its oil. Canada exports a lot of its oil. In 2006, the price of crude per barrel was $65. In 2011, a barrel of crude cost over $100. When the price of oil goes up, the dealers make a killing and the buyers have to sit back and take it. Canada has been working the Alberta tar sands like a lucky leprechaun hooker since 1967, while political opposition has stalled drilling efforts in the Pennsylvania Marcellus Shale.
The Canadian dollar is now just as strong—or weak—as the American dollar.
Strong loonie, weak dollar. A lot of different factors determine the strength of a currency. High interest rates, a strong economy, and growing foreign investment all signal improvement. While the American dollar has always attracted a lot of foreign investment, our interest rates are low and our economy is sputtering. Canada seems to be doing better. At the end of 2008, one Canadian dollar would get you 80¢ American. As of today, one Canadian dollar gets you 99¢ American.
Searching for reasons that might explian this genial twist of fate, some Canadian politicians and pundits have been quick to champion Canada’s conservative socialism and finger America’s rugged capitalism. But other Canadians are questioning whether stumpy U.S. housing prices, stubborn oil prices, and a sallow-looking dollar are less reflections of political character than they are the ebb and flow of global economic trends.
One thing is clear. Americans need to start saving more. According to Statistic Brain, the average American household has a pitiful $35,000 saved up for retirement. Americans lease new cars every couple of years, over-leverage our credit cards, and generally act as though budgets are hobgoblins. As a nation, more than half of the money we have stored in savings is also owed in debt. You betcha.
Money, for us, is a ticket to freedom. Money, for others, is a promise of safety. Let’s start acting a little less like impulsive children and a little more like adults who are custodians of their children’s future.
But Canada has always been cool, so I think we should celebrate these dark days. Let’s toast to our neighbors up north. They deserve it. May you enjoy your superior prosperity! Come spend your dollars on all our worthless bric-à-brac instead of wisely investing in all of our depressed homes. Thanks!