Canada’s statistical agency is paying close attention to the “pot of cash” that Canadians have saved up amid the COVID-19 pandemic as it looks to understand who is saving and how that money may contribute to the shape of the recovery.
Prior to the pandemic, Canadians saved just 2-3% of their disposable income, but that jumped to 28.2% in the second quarter of this year, Greg Peterson, Assistant Chief Statistician responsible for Economic Statistics at Statistics Canada, told Reuters on Monday.
“There’s that pot of cash that’s basically sitting there and we’re interested in monitoring where that goes,” Peterson said. “It’s kind of a notable divergence from what we normally see.”
One of the main questions is whether the extra money will go toward paying down household debt or whether it will be spent on goods and services, Peterson said.
The economy is now showing signs of having put the worst behind it, and Canada’s real GDP is seen rebounding 3% in July, edging economic activity closer to pre-pandemic levels, data showed last week.
The jump in the savings rate came in the second quarter amid a unique set of circumstances: disposable incomes climbed sharply on higher government transfers - namely emergency wage benefits - while household spending fell amid COVID-19 shutdowns.
The agency is looking at producing more quarterly data on things like household income and savings rate by income quintile, something which they’ve only broken out on annual basis in the past, Peterson said.
Separately, the agency will continue to produce its so-called “flash estimates” for key indicators for the foreseeable future. It started issuing preliminary numbers for indicators like monthly retails sales as speed became increasingly important amid the pandemic.
“For as long as people are happy with receiving early indicators, with that possibility of a bigger revision, then I see no reason why we wouldn’t continue,” he said.