Optimism overblown

Re: Banks are flush and that’s good, Philip Cross, FP Jan. 8

Philip Cross mentions that business saving was very little in the first three quarters of 2020, but that household saving over this period amounted to about $ 687 billion, an abnormally high amount, which other commentators have remarked means a lot of pent- up consumer demand to spill out once the lockdowns end. However, over the same three quarters of 2020, the federal and provincial governments have engaged in about $ 500 billion of deficit spending on people’s behalf. Although this spending on Canadians was directed by government, rather than by individual taxpayers, in terms of Canadian households it has created a liability for them, just as if they had run up their personally directed spending with their own credit cards. Therefore, net household saving is effectively much less than the figure Philip Cross indicates, and, as well, the optimism of pent- up household seems somewhat overblown.

Alex Macmillan, Kingston, Ont.