Households expect return to pre-pandemic spending within a year: BoC
Canadian household spending will eclipse earnings in the coming months as vaccinations increase and uncertainty from the pandemic recedes, the Bank of Canada said in a report released Monday.
The central bank says the gap between spending and wage expectations has never been so wide in its quarterly survey of consumer expectations.
Officials at the bank suggest that gap is likely the result of households intending to spend some of the billions in savings built up during the pandemic, either because they cancelled purchases or had no place to spend the money due to restrictions on travel and dining out.
Respondents anticipated spending more than one-third of extra savings from the pandemic over the next two years, and onetenth to pay down debt.
The survey, released Monday, says consumers expect their spending patterns to return to normal in about one year, with post-vaccination increases on a wide range of goods, especially travel and social activities.
Overall, 75 per cent of respondents said they planned to get vaccinated, a further five per cent said they already had a first dose, and the remaining 20 per cent either were unsure or didn’t plan to get vaccinated.
The arrival of vaccines appears to have led to growing optimism, as more respondents expected a return to prepandemic life than in previous surveys over the past year.
Still, consumers expect the economic recovery from COVID-19 to be slow and the threat of the virus to diminish no earlier than in the second half of the year.
Workers said they didn’t expect a return to a normal work schedule for another eight months, which is three months later than responses from the last iteration of the survey in the fourth quarter of 2020.
There was a split, though, in how people viewed the coming months as women and lowerincome households expect a slower recovery than men and households with higher income, which the bank said could reflect the uneven impact the pandemic has had in the economy.