Services Spending to Kick-Start Recovery in Consumption: Canada’s Two-Year Household Consumption Outlook

The Conference Board of Canada, 14 pages, October 21, 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

  • Thanks to the economic reopening this past summer, spending on in-person services is finally bouncing back, supporting the recovery in household spending.
  • Real household consumption is expected to rebound by 4.8 per cent in 2021 and by 5.9 per cent in 2022, reaching full recovery by the end of this year.
  • Going into 2023, the combination of rising interest rates and pent-up demand on services gradually being fulfilled will slow growth in consumer spending to 2.1 per cent.
  • New restrictions implemented during the pandemic’s fourth wave, including proof-of-vaccine requirements, will slow the recovery of household spending on travel services, restaurants, and recreation activities.
  • The growth in spending on goods will be constrained by the shift among households to spending more on services post-pandemic, as well as by the ongoing issue of supply shortages in the near term.
  • At least some of the additional savings accumulated by households during the pandemic will be spent over the next two years.
  • Surging mortgage debt poses a downward risk to household finances and spending, as interest rates could start rising earlier than expected given that inflation has been running hot.

Table of Contents

Key findings
Household Consumption Snapshot
The Fourth Wave Is Slowing the Pace of Recovery
Household Finances: The Good, the Bad, and the Ugly
Spending on Goods Constrained by Waning Demand

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