OTTAWA — Canadians have saved up a massive nest egg through the pandemic and a rush to spend that money could “meaningfully affect” economic growth, a Bank of Canada deputy governor said on Thursday.
Canadians on average spent $4,000 (US$3,190) less in 2020 because of the pandemic, Deputy Governor Lawrence Schembri said in a speech to the restaurant industry. This, coupled with higher household incomes due to emergency aid transfers, adds up to $180 billion in excess pandemic savings.
“There is much uncertainty about what Canadians will do with these savings. This is important because these savings are large enough to meaningfully affect the trajectory of the economy,” said Schembri.
“If Canadians spend more than we expect, it would strengthen the recovery in consumption and employment.”
If Canadians were to spend 15 per cent of those savings over the period from the second quarter of this year through the end of 2023, nominal household spending growth in 2021 would jump to 5 per cent from the 4.3 per cent the bank projected in January, said Schembri.
© Thomson Reuters 2021
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