credit and debt
CANADA’S BLOATING BANK ACCOUNTS Canadian household saving—or rather, non-spending—has reached new levels in the past year. The question is when and on what things the accumulated funds will be spent.
I still find it peculiar to be talking about Canadians’ record rate of saving, given ongoing discussion of inflation, housing affordability (or lack thereof ), and the frequent surveys that indicate many Canadians are one paycheque away from being insolvent. While many Canadians continue to struggle financially (and some even more so due to reasons related to the pandemic), in aggregate Canadian households are saving more than ever before. And we're not talking about asset
appreciation here; we’re talking about money that has been earned but not spent. Over the past 4 quarters, for example, Canadian households have amassed $241 billion in savings (in a more typical year we would stash away approximately $15 billion). While some of this has already been deployed into housing market, new vehicles, and restaurants, the remaining savings will provide fuel for future spending and, by extension, economic activity.
CANADIAN HOUSEHOLDS SAVING AT A HISTORIC CLIP
$100
$80
total household savings Q 2 2020- Q 1 2021 $241.9 BILLION
$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 Q1
SOURCE: STATISTICS CANADA DATA: MONTHLY HOUSEHOLD NET SAVING (BILLIONS $), CANADA
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