February 06, 2023 19:03 GMT
Household Excess Savings Seen The Largest Upside Risk To Growth
- Within BOC’s Market Participants Survey for 4Q22 published today, the widest perceived upside risk to the growth outlook of the 27 participants surveyed was a greater deployment of accumulated savings.
- It’s a useful reminder that whilst the Canadian household savings rate has fallen considerably from pandemic surges, at 5.7% in 3Q22 it was still much higher relative to its pre-pandemic five year average of 2.2%.
- That’s in contrast to the US savings rate of 2.9% in Q4 vs its historical pre-pandemic average of 7.6%, running down ‘excess savings’ generated early in the pandemic in the process unlike in the case of Canada.
Canada household savings rate (white) vs US equivalent (yellow)Source: Bloomberg