credit and debt
CANADIAN HOUSEHOLDS TIGHTEN THEIR BELTS While governments spend to save the economy, Canadian households are spending their time saving.
Ballooning public debts being created at the federal and provincial levels are garnering much attention—and deservedly so—but a lesser-told tale is evolving in parallel: Canadian households are saving like never before. (It is worth noting here that “savings” is calculated as the amount of disposable income not spent on final consumption goods and services, per Statistics Canada.) In fact, the $94.1 billion innet savings during Q2 2020 was more than four times the next- highest quarterly net savings amount going back to the beginning of 1990 when the data were first collected. It was also almost equal to the total net savings achieved over the
preceding 10 quarters ($95.9 billion). While it seems as though our turbulent economic experience of the past six months has created an elevated desire for households to safeguard their finances in the short-term—while also ref lecting an inability to spend money on certain things, like tropical vacations—it is worthwhile to consider if this may represent a longer-term shift in attitudes towards savings. While a persistently-high savings rate could have negative implications for the pace of future economic growth over the long-term, the journey immediately ahead of us could be a little less bumpy.
HOUSEHOLD SAVINGS ACCRUING AT A HISTORIC PACE
$94.1B Q
$100
$80
$60
$40
$95.9B
PREVIOUS QUARTERS
$20
$0
-$20
SOURCE: FINANCIAL FLOW ACCOUNTS, STATISTICS CANADA DATA: MONTHLY HOUSEHOLD NET SAVING BILLIONS , CANADA
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