Pax Global Media
Pent-up demand brought on by the pandemic has Canadians shelling out the dough on home improvements, new cars and, yes, travel, according to data from The Bank of Canada.
This “binge,” so to speak, is what’s driving the economy in 2022 as consumers embark on record-setting spending sprees, despite facing new cost pressures, such as having to pay more for gas and groceries, as inflation heats up.
According to a March 23 report in Reuters, Canadians are ramping up their discretionary spending after racking up savings over the past two years, which were subject to COVID-related lockdowns and border closures.
RBC Economics reports that excess savings in Canada may exceed $300 billion, which has helped some consumers weather the rising costs of living.
RBC’s consumer spending tracker reports that tourism – in addition to the auto sector and the home improvement industry – has benefited greatly from the buying frenzy that’s ensued.
“People are seizing the moment to travel,” Susan Catto, head of publishing and production at Travelzoo Canada, told Reuters, noting that travellers are booking trips they can take immediately.
Catto expects bookings to increase as pandemic-related border rules begin to ease (which they have, as the Government of Canada will drop pre-entry testing for fully vaccinated travellers on April 1).
But the rise in consumer activity may eventually stabilize as more Canadians face record mortgage debt and higher interest rates, economists say.
Consumers may also soon shift their priorities in terms of where they want to spend their saved-up cash.
This, too, may bode well for the travel industry, at least in the eyes of one Ottawa-based lumber shop owner who was interviewed by Reuters.
Tim Priddle, co-owner of the WoodSource, expects the home improvement market to cool later this year, and into next year.
“A lot of people in 2023 will probably say ‘let’s go on a holiday to Europe’ rather than renovate the backyard,” he said.
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