Even before the advent of the now infamous Covid-19 pandemic, money-watchers were finding a potentially disturbing phenomenon in Canada. The numbers clearly indicated that households were diverting monies more and more to savings. And while thrift is great and money-managers would undoubtedly applaud the shift, it does not necessarily bode well for the Canadian economy. The reason for this is largely psychological. It’s normal for individuals and families to relax when money needs are largely met and jobs are available. In such a climate, it’s believed that funds are not likely to dry uo. Therefore families and individuals are less interested in socking it a way and more interested in investment opportunities and ways to enjoy their monetary resources. When the numbers show that savings are on the rise, which has been the case in Canada since before the pandemic, it suggests widespread economic worry. People are planning ahead and anticipating the need for something to call back on.
- Data shows that Canadian households were diverting funds to savings at a greater rate prior to the pandemic.
- Moreover, the rate these households are diverting cash to savings has been steadily increasing since 2018.
- As economic indicators go, the amount households put aside is iffy. Pundits are divided as to whether it bodes well or not so well.
“When the savings rate rises, this tells us households are worried about the economy.”