One of the by-products of the COVID pandemic is that we’re borrowing less.
Anyone who has been in self-isolation or a lockdown knows that they are spending less. And it’s evident in all the economic numbers – gasoline sales are down, we aren’t going to movies or entertainment facilities and restaurants are seeing significant reductions in business.
All of this means the average consumer is spending less and, given that a chunk of that spending used to be done on credit cards or with borrowed money, the amount of new debt households are adding is going down.
The economists at ScotiaBank zeroed in on that topic in a regular posting from late last week. It showed that the growth in consumer or household debt levels had slowed although, interestingly, our appetite for mortgages has not declined.
What has changed is borrowing for consumption. Now, a part of that is that lenders and credit cards are offering more generous terms or have deferral programs so people may still be spending but debt levels are not growing because we’re not yet counting it.