Signs of a Canadian K-shaped economy in 2025 data
Canada's wealth gap grew in 2025 as higher income households benefitted from strong market gains last year, while lower earners struggled with weak employment income and declining interest rates, according to a report released Monday by Statistics Canada.
StatCan's income gap, the difference in the share of disposable income between households in the top 40 per cent and bottom 40 per cent of the income distrubtion, rose to 46.7 per cent in 2025, up from 46.4 per cent in 2024.
While lower interest rates have moderated borrowing costs, they've come with lower returns for interest-bearing investments and savings accounts, which has impacted households on the lower end of the income spectrum.
Wage growth also slowed in 2025, down to 3.1 per cent from 3.3 per cent in 2024 and 3.7 per cent in 2023. StatCan notes that wage growth was weak in goods-producing sectors as well as in services.
The lowest quintile of income earners saw the weakest increases in disposable income last year, up 2.6 per cent vs a 3.8 per cent increase for all households. That cohort also saw a decline in average investment earnings of $443, which StatCan attributes to a fall in interest rates.
The highest quintile of earners saw their disposable income grow at 4.1 per cent, largely through gains of 9.1 per cent in self employment income and a 4.7 per cent increase in transfer payments from retirement benefits. That cohort also saw their investment earnings grow almost three times as much as the average for all households, largely due to the strength of equity holdings.
By the end of 2025, according to StatCan, the wealtheist 20 per cent of Canadians now account for almost two-thirds of Canadian net worth, with an average of $3.5 million per household. The bottom 40 per cent of the wealth distribution now account for 3.0 per cent of total net worth.
Notably, households aged 35 and under saw their net worth grow at an above-average pace in 2025, largely due to outperformance in their financial assetas. Households under 35 saw returns of 12.2 per cent, compared to an average return of 9.9 per cent for all households.
