If there is one day that will remain in the history of Canadian consumer spending, it may be March 12.
It was the day that Prime Minister Justin Trudeau became isolated from himself after his wife Sophie Grégoire was diagnosed with COVID-19. This news and a breathtaking dip in the stock market served “as a punch to Canadian consumers struggling to absorb a spike in pandemic-related developments,” says report by RBC economists Colin Guldimann and Carrie Freestone.
Data has become a crucial product these days as policymakers and politicians scramble to assess the impact of what may be the fastest economic crisis in history.
This week, Statistics Canada released GDP figures for March for the first time at the start of what it called a “Nowcast,” recognizing the “demand for reliable information on the overall impact of this health crisis on the economy.” ‘economy”. Normally, the agency publishes GDP data two months later.
The numbers were dark. The Canadian economy contracted 9% in March, the largest monthly decline on record.
Since the last financial crisis, Canadian consumers have been an important driver of growth and tracking their spending is an important indicator of the state of the economy.
Rather than relying on overdue retail data, RBC economists are using proprietary bank spending data to assess in a timely manner how the virus and the shutdown have changed consumer spending.
Highlights of key dates for the coronavirus crisis:
• Canadians spent 13% more on March 12 than a year earlier, mostly on groceries
• Restaurant spending fell 29% and transportation fell 9% when Ottawa announced on March 16 that it would close borders for most non-citizens. Grocery spending increased 125%
• Ontarians and Quebecers increased purchases by almost half on the day of the business closings
• Card spending dropped 60% in the week ending March 30 of the previous year
Some other conclusions from economists:
“Cook, not bistros”
The grocery store increased 80% from the previous year in the week ending March 17, as Trudeau began to isolate himself and remained elevated for two weeks as anxious Canadians filled their guard eat. These expenses stabilized at the end of the month, but catering expenses, which fell by almost 80% over the same period, did not recover, despite take-out orders and deliveries.
“Software, not streetwear”
Canadians spent 88% less on clothing, gifts and jewelry during the week ending March 30. After a brief increase in department store purchases, department store sales were down 40% from the previous year.
Sales of software and data, on the other hand, saw the strongest growth in discretionary spending, as Canadians equipped themselves to work at home.
“Streaming, no projections”
Spending on cinemas and art galleries was already down before official measures of social distancing were mentioned, but bottomed out in the last two weeks of March. Spending on books and music, including streaming, fell little.
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POULTRY PROBLEM Chicken farmers in Canada reduce the number of chicks they raise between May and July by 12.6% as demand decreases due to massive restaurant closings and COVID-19 outbreaks in meat processing plants Canadian producers are slowing production. Jake Edmiston reports on this and other food supply issues during the coronavirus crisis. GREG SOUTHAM / POSTMEDIA
- Today’s data: Canadian international transactions in securities, leading indicator of the United States, Chinese GDP, industrial production, retail sales (check)
- Notable gains: Procter & Gamble Co, Schlumberger
A record 22 million Americans have claimed unemployment benefits in the past month as the coronavirus shuts down the economy. This unprecedented spike in unemployment has almost wiped out all job gains since the Great Recession. The numbers are shocking, but economists say the good news is that layoffs in the United States have peaked. Initial jobless claims for the past week totaled 5.25 million, down 1.4 million from the previous week. After hitting a record two weeks ago, jobless claims have registered two consecutive declines, suggesting that the peak of layoffs is likely behind us, says Oxford Economics. Oxford predicts that 24 million jobs will be lost in April, the unemployment rate will reach 14% and the participation rate will fall below 60%. While some jobs will be restored when activity picks up, economists do not expect employment to reach the levels seen in February 2020 until the beginning of 2022.
Today’s Posthaste was written by Pamela Heaven (@pamheaven), with files from The Canadian Press, Thomson Reuters and Bloomberg.
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