The strength of the recovery depends on how quickly Canadians spend a huge treasure chest: Bank of Canada

Canadians spent an average of $ 4,000 less in 2020 due to pandemic, says Deputy Governor Lawrence Schembri

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OTTAWA – Canadians saved a huge nest egg during the pandemic and a rush to spend that money could “significantly affect” economic growth, a Bank of Canada deputy governor said Thursday.

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Canadians spent an average of $ 4,000 (US $ 3,190) less in 2020 due to the pandemic, Deputy Governor Lawrence Schembri said in a speech to the restaurant industry. This, coupled with higher household incomes from emergency aid transfers, adds up to $ 180 billion in excess savings in the event of a pandemic.

“There is a lot of uncertainty about what Canadians will do with these savings. This is important because these savings are large enough to significantly affect the trajectory of the economy, ”said Schembri.

“If Canadians spend more than expected, it would strengthen the recovery in consumption and employment. “

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If Canadians were to spend 15% of these savings in the period from the second quarter of this year to the end of 2023, nominal household spending growth in 2021 would rise to 5% from the 4.3% that the bank had projected in January, says Schembri.

© Thomson Reuters 2021