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THE RAINY DAY DOESN’T STAND A CHANCE Never before have Canadian households saved money at the rate they currently are. The benefits will be reaped as the economy re-opens.
Some people seem to be reluctant to refer to the recent historic accumulation in Canadian household savings as, well, savings, but saving is what Canadian households have done for the past three quarters. Call it what you like—an inability to spend money, a fear of what the next rainy day might look like—but since the end of March, Canadian households have socked away upwards of $200 billion, including more than $90 billion in Q2 2020 alone.
When the economy fully re-opens, this money is likely to be deployed across all sectors, especially in travel, accommodation, and food and beverage. Real estate has already likely been impacted by these accumulated savings and will likely continue to be impacted by them for years to come. As our current red-hot market cools through 2021, this is one factor (along with increased immigration and still-low interest rates) that will help secure a soft landing.
READY TO SPEND, HOUSEHOLDS EYE THE END (OF THE PANDEMIC)
$100
$196.9B Q Q HOUSEHOLD SAVINGS
$80
$60
$40
$20
$0
-$20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
SOURCE: FINANCIAL FLOW ACCOUNTS, STATISTICS CANADA DATA: QUARTERLY HOUSEHOLD NET SAVINGS (BILLIONS $), CANADA
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