Bank of Canada : Canadian Survey of Consumer Expectations—Third Quarter of 2020

10/19/2020 | 10:55am

As in the second quarter, the third-quarter survey included questions on the impacts of COVID‑19 and the measures to contain its spread. The survey also added new questions on how the pandemic is affecting households' savings.

Overall, consumers remain cautious but are more willing to engage in some economic activities than they were in the second quarter. Respondents continue to perceive the health risks related to COVID‑19 as moderate to high. Perceptions of the economic risks from the pandemic have improved slightly. However, most respondents expect that the recovery will be slow.

The pandemic continues to weigh on households' current behaviour and outlook for the future. The impact of COVID‑19 on spending patterns has persisted, with respondents reporting that they are shopping less often and shopping online more frequently. More people reported that they had cancelled or postponed major purchases than in the previous quarter.

With lower spending and reduced recreational and social activities, some consumers, mostly those with higher incomes, reported higher than usual savings (Chart 1-A). Lower-income households were more likely than other households to report plans to keep extra savings as a safeguard, though precautionary saving was common across all income groups (Chart 1-B). Only a small share of respondents reported planning to spend some of their additional savings on non-essential or more discretionary items, such as furniture or swimming pools.

Many consumers expect their work situation will return to normal sooner than their spending. This suggests that consumer demand will likely recover more slowly than the labour market, implying persistent slack in the economy.

Income Yes No
Less than $40,000 20 80
$40,000 to $100,000 38 62
$100,000 or more 47 53

Chart 1-B: Households reported that they will keep most of their additional savings

Question: What are you planning to do with your extra savings?

Option $40,000 or less $40,000 to $100,000 $100,000 or more
Keep most of these savings as a precaution 59.06 47.22 47.12
Keep some of these savings as a precaution and pay down debts or spend 33.21 44.18 44.96
Spend most of these savings in 2021 and 2022 7.73 8.59 7.91

Disclaimer

Bank of Canada published this content on 19 October 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 October 2020 14:54:05 UTC

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