Consumers Ready to Spend Again as Long as Restrictions Are Lifted: Canada’s Two-Year Household Consumption Outlook—April 2021

The Conference Board of Canada, 13 pages, April 28, 2021
Issue Briefing
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This quarterly economic forecast presents the medium-term outlook for the Canadian economy. This release focuses on household consumption. For an overview of all major components of the economy, go to the Canadian Outlook main page.

Document Highlights

  • Household spending started the year on a weak footing, as a result of stringent lockdown measures during the second wave of COVID-19 in Canada.
  • Real spending on goods and services dropped by an estimated 1.4 per cent in the first quarter of this year.
  • Massive government income support programs significantly boosted the household income and savings rate last year, implying that consumers’ finances are in better shape and households have more spending capacity.
  • We expect that real consumption will rebound by 3.5 per cent in 2021 and 6.3 per cent in 2022, assuming that restrictions will be eased later this year and Canadians will start to unleash pent-up demand for tourism-related services. Total spending is expected to recover fully by early 2022.
  • Soaring housing prices, coupled with low interest rates, will pose an upward risk to household spending on durables and semi-durables this year. Higher home prices will lead some households to withdraw additional funds from home equity loans.

Table of Contents

Key findings

Household consumption snapshot

Consumption to rebound following the second wave winding down

Household spending started the year on a low note

Thickened wallet to support the recovery of household spending

Consumers’ pent-up demand for travelling keeps building

Methodology

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