Pandemic cash flow: Here’s how Canadians spend theirs | Business and economic news
Canadians have raised a huge amount of money during the COVID-19 pandemic and can’t wait to spend on summer rentals, exotic vacations and backyard pools, a sign the economy could bounce back faster than expected.
The country’s vaccination campaign is intensifying, with Prime Minister Justin Trudeau promising to vaccinate anyone who wants it by the end of September. The snow is melting and Canadians are making plans again.
The demand for backyard renovations is so high that contractors say they can’t stock up on in-ground pools and there is a shortage of cedar for decks. Domestic travel deals for the summer months are in the process of being bought out, with some lining up for “wishlist” travel for later this year. Sales of recreational vehicles are booming.
“I would say that sales have increased by about 50% [versus last year]. Demand is especially high for new riders, ”said Gary Haines, who sells used Harley-Davidsons and other motorcycles at a Toronto-area dealership.
A full package for a new rider, including a motorcycle, safety lesson, and gear, can range from Can $ 4,000 ($ 3,188) to Can $ 40,000 ($ 31,881), Haines said, with offers split between purchases. entirely in cash and those funded.
The pandemic has left more than three million Canadians unemployed at the depths of the crisis. With travel and social outings on hold, spending plunged, while stimulus and government assistance boosted disposable income and the household savings rate soared.
A year later, most Canadians are back to work and many have saved like never before. The Bank of Canada (BoC) estimates that Canadians have accumulated a pandemic nest egg of Can $ 180 billion ($ 143 billion).
If 15% of the cash reserve was spent until 2023, it would speed up Canada’s recovery, the central bank said earlier this month. This could push rate hikes forward.
A large job gain in February, which, along with other first-quarter data, bolstered his view that consumers have adjusted to lockdowns, BoC deputy governor Toni Gravelle told Reuters on Tuesday.
“These data points… [are] giving us confidence, it is more and more likely that we will not see more jerks [in the recovery],” he said.
Canadians are not the only ones accumulating money. Households around the world have spent the past year racking up savings, with policymakers in North America, Europe and Asia hoping that bigger wallets will trigger a consumer-led recovery.
But in Europe, a hoped-for pandemic spending boom has been delayed by further lockdowns and hiccups in the vaccination campaign, prompting some forecasters to scale back growth prospects.
The International Monetary Fund has forecast Canada’s real gross domestic product (GDP) to grow at 4.4% this year, compared to global economic growth of 5.5% and US growth of 5.1%. .
New clothes, will travel
Consumer spending on clothing and accessories is rebounding, surpassing pre-pandemic levels, which economists say shows Canadians are preparing to return to restaurants, bars and theaters once the vaccinations roll out.
“In general, when people shop for clothes, it’s almost like they’re bracing for better days,” said Rannella Billy-Ochieng, economist at RBC Economics.
“The big areas to watch are the hard-hit service sectors,” she said, highlighting pent-up demand for dinner parties in restaurants and bars, as well as the return to movies and in-person theater. And the biggest: travel.
“If you love to travel and don’t have to travel for a whole year, you’re ready to really push the boat,” said Susan Catto, Canada Content Manager at Travelzoo, adding that flexible or refundable trips sell out. good .
Almost two-thirds of Canadians plan to travel domestically in the next six months, Catto said, citing a poll. And after being stuck at home for so long and missing out on some milestone celebrations, there is growing interest in bucket list trips.
“We have seen this giant boom in faraway destinations like the Maldives or Bali or the islands of Tahiti,” Catto said. “People say, ‘I’ve waited so long, I think I’m going to stay in an overwater bungalow in the Maldives.’”
Chalets and swimming pools
For those who stay closer to home, the first destination is the chalet. In many Ontario cottage communities, house prices are rising more than 30 percent year-over-year, according to the Canadian Real Estate Association.
According to booking site Vrbo, demand for summer vacation rentals has increased by 75%, with the Okanagan region of British Columbia and the Muskoka region of Ontario being among the top locations.
In town, homeowners are gearing up to take on their dream backyard projects, said Roger Gaudet, owner of Stix N Stonz Landscape in Ottawa.
“For the people who were maybe on the fence, say, a swimming pool, COVID was all they needed,” he said, adding that the growing demand was leading to a shortage of everything from pools to wood. cedar for fences and decks.
Cedar decks are so hot that prices have nearly tripled in the past year, according to lumber data firm Random Lengths. Even regular lumber runs through the roof as people spend on renovations such as extensions and driveway structures.
“Instead of building a shed for the lawn mower, you’re building a backyard office,” said John Duncanson, lumber analyst at Corton Capital.