One segment of the economy that has rebounded quickly – perhaps more quickly than expected – from the pandemic lockdown is consumer spending.
It has, in some categories, surpassed levels seen before COVID. These include spending on groceries and the like while expenditures on entertainment have fallen dramatically.
But not all the money we saved from one pocket has found its way into the other. Government is fueling this spending spree as well.
In an update yesterday, economists at ScotiaBank said total spending across the board is now roughly where it was pre-COVID. They attribute some of that to reduced childcare expenses, deferral of payments and strong house prices freeing up space on lines of credit. But they also point to government programs, notably CERB which more than replaced the amount of wages lost to job cuts.
In a similar report, the Royal Bank’s economics unit said Ottawa has paid out $2 through CERB for every dollar of lost wages, which give credence to reports from employers that they are having trouble getting workers who are comfortable at home to return to the job.