Spending To Eclipse Earnings As Vaccinations Increase

Canadian household spending will eclipse earnings in the coming months as vaccinations increase and uncertainty from the pandemic recedes, says the Bank of Canada. It 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 one-tenth to pay down debt. It 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.