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<\/p>\nA surge in Canadians\u2019 disposable incomes and a decline in their spending habits have resulted in approximately $170 billion of surplus of cash, $90 billion of which is tied up in households, according to a .<\/p>\n
The COVID-19 pandemic was the impetus for reduced consumer spending, but with the addition of the government\u2019s , which bolstered incomes, the amount of money Canadians saved skyrocketed. The report noted that the excess cash\u2014the other $80 billion is held by businesses\u2014which is about 4% of consumer spending, is a record.<\/p>\n
\u201cThat spike in disposable incomes coincided with a notable decline in spending, which resulted in the savings rate surging from 3.6% to 28.2% as of June,\u201d read the report. \u201cSince then, government support has become increasingly more tailored to those who need it the most, while the re-openings have seen a nascent recovery in consumer spending. Using US data for the third quarter as a guidepost, the Canadian savings rate likely fell to 13% in Q3\u2014still miles above the 3.6% level seen prior to the pandemic. With the second wave of infection upon us, that rate is likely to remain elevated during the winter.\u201d<\/p>\n
The report\u2019s findings are all the more bizarre considering the economy is still reeling from pandemic-induced business this past spring, and yet Canadians have never been more flush. But upon closer examination, low-income households accounted for the overwhelming majority of job losses in Canada, and their consumption habits didn\u2019t much diminish as they continued buying essentials. However, the majority of the surplus money belongs to mid- and high-income households, which curtailed their non-essential outlays.<\/p>\n
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\u201cWe do not have current data on spending by level of income for Canadians, but utilizing high-frequency US data, we learn that spending amongst high-income households is currently 10% below its January level\u2014notably weaker than the 3% drop seen amongst low-income households,\u201d said the report. \u201cWith the happy days of summer over, it is reasonable to assume that mid- and high-income households will, in fact, reduce consumption of nonessentials again.\u201d<\/p>\n
The report also predicted that consumption growth will decelerate while incomes will stay elevated because of both the Canada Recovery Benefit program and Employment Insurance, which will cost $17.9 billion and $13.5 billion, respectively, through the next two years, and because of new job creation.<\/p>\n","protected":false},"excerpt":{"rendered":"
A surge in Canadians\u2019 disposable incomes and a decline in their spending habits have resulted in approximately $170 billion of surplus of cash, $90 billion of which is tied up in households, according to a . The COVID-19 pandemic was the impetus for reduced consumer spending, but with the addition of the government\u2019s , which […]<\/p>\n","protected":false},"author":6,"featured_media":22962,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[],"acf":[],"_links":{"self":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8870"}],"collection":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/comments?post=8870"}],"version-history":[{"count":3,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8870\/revisions"}],"predecessor-version":[{"id":28846,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/posts\/8870\/revisions\/28846"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media\/22962"}],"wp:attachment":[{"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/media?parent=8870"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/categories?post=8870"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.canadianrealestatemagazine.ca\/wp-json\/wp\/v2\/tags?post=8870"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}