A new report from Toronto-Dominion Bank reveals a remarkable shift in Canada's economic landscape during the pandemic years, with the wealth gap experiencing an unexpected reversal in its growth trajectory. According to analysis using Statistics Canada data, the difference in wealth share between the top 20% and bottom 40% of households contracted by five percent from 2019 to 2023, reaching a record low of 61%.
Unprecedented Wealth Gains for Lower-Income Households
The most striking finding shows average net worth surged by a record 76% for the bottom 40% of Canadian households during this period. This growth rate dramatically outpaced the 10% increase experienced by the top 20% of households, representing more than seven times faster wealth accumulation for lower-income Canadians.
Mekdes Gebreselassie, TD economist analyst and author of the report, explained the factors behind this surprising development. "There was the injection from government transfers, and savings were high because people were in lockdown and spent less on services, so I think all that aggregated to increase the wealth jump for the bottom 40 percent," Gebreselassie told Financial Post.
Younger Households Lead the Charge
The report highlights particularly strong performance among younger Canadians. Households under 35 years old saw their wealth skyrocket by 81% between 2019 and 2023, compared with just 11% for the average household aged 35 or older during the same period.
This demographic also experienced a record increase in their share of total household wealth, rising three percent to reach nine percent. This occurred despite a two percent decline in their population share, which stood at 19%.
Gebreselassie noted that younger Canadians often overlap with the bottom 40% of households, partly because they have had less time to build wealth compared with older age groups.
Housing Market Access and Wealth Transfers
The analysis reveals that lower-wealth households accessed the housing market at unprecedented rates compared with recent years before the pandemic. Both financial and real estate assets showed strong growth during this period, as did vehicles and other non-financial assets, boosting net worth gains for all households.
The homeownership rate for younger households hit its highest point in history and grew at a faster pace compared with the rest of the population—seven percent versus 0.6 percent, according to TD data.
Wealth transfers from family members played a crucial role in this development. The average inheritance for under-35 households rose 45% to $138,438 in real 2023-dollar terms between 2019 and 2023, compared with 22% for all households to $197,245.
Recent Trends and Future Concerns
Despite the pandemic-era gains, the report notes that the wealth gap has been slowly widening in recent years. By the third quarter of 2025—the most recent quarter for which data is available—the gap stood at 62.4%, still narrower than the 65% recorded in 2019 but showing a concerning upward trend.
Gebreselassie attributes this recent widening to interruptions in employment and income for lower-income quintiles that have trickled down to household wealth. Income quintiles measure income distribution by dividing a population into five equal, ranked groups.
The report raises important questions about whether these pandemic-era gains will prove sustainable or if traditional wealth inequality patterns will reassert themselves in Canada's post-pandemic economy.
