Canadians Focus on Saving and Debt, Not Spending: Poll

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Canadian households are concerned about consolidating their finances this year, an economy that could hurt the recovery, according to a new survey.
In a poll conducted by Nanos Research Group for Bloomberg News, three in four Canadians say their top financial priority is to pay off debt or keep savings high. Only 11 percent said they were planning to make a major purchase.

One of the main unknowns in the coming months is the extent to which households will use up an unexpected accumulation of savings. Amid a massive downturn last year, Canadians have fared much better off financially thanks to government income support payments, soaring house prices and market gains.

The improving financial situation fuels hope that households will continue to spend once the COVID-19 pandemic is over. Growth is expected to reach an annualized pace of over 5% in the last nine months of this year after a slowdown in mid-winter, largely due to an expected surge in consumer spending, according to a Bloomberg survey. economists last month.

“We have strong pent-up demand in the economy,” David McKay, CEO of the Royal Bank of Canada, told a conference on Monday. “We have significant savings on consumer balance sheets.”

At the start of the pandemic, Prime Minister Justin Trudeau’s government acted aggressively to implement income and credit support programs to keep businesses and households afloat. As a result, the average disposable income for the first nine months of 2020 has increased by about $ 100 billion compared to the same period in 2019 despite massive job losses, according to Statistics Canada data.

Household spending, meanwhile, fell by more than $ 50 billion during this period. The net result is around $ 150 billion in new household savings that have not been spent.


What Bloomberg Economics says …

“A strong rebound from the lockdown in Canada loses momentum in the first quarter of 2021. We anticipate a weak and patchy period through the winter, which will turn into a stronger-than-consensus recovery from the second quarter.

–Andrew Husby, Bloomberg economist


In addition to the surge in savings, a real estate boom has also made many Canadians richer on paper. Household net worth has increased by more than $ 600 billion in the first six months of the pandemic, according to Statistics Canada.

Yet, given that Canadians are among the most indebted households in the world, they could instead use this windfall to strengthen their balance sheets.

Among Nanos poll respondents, 39% said their top financial priority this year would be to pay off debt, while 37% said it would be to keep extra money in their savings account. About 13% said their top priority was to make a major investment, such as in real estate or the stock market.

The hybrid telephone and online survey of 1,048 Canadians was conducted between December 27 and December 30 and has a margin of error of plus or minus 3 percentage points.



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