Frugal Canadian households and businesses have accumulated a minimum of $170 billion in excess cash throughout COVID-19 and are currently sitting on the largest cash hoard in recorded history, according to CIBC.
In a report published on Tuesday, CIBC deputy chief economist Benjamin Tal and economist Katherine Judge wrote that the disparity is a result of a spike in disposable income not being met with increased consumer spending.
In the second quarter, labour income fell by over $100 billion, but that number was offset by government transfers, which grew by $225 billion and what’s described as “other benefits” — pandemic emergency programs — rising by $151 billion. Instead of spending that money, Canadians hoarded the extra cash, leading to the savings rate increasing from 3.6 per cent to 28.2 per cent as of June.
Tal and Judge estimate that Canadian households, mostly those made up of mid-income and high-income Canadians, are sitting on $90 billion in excess cash, which they’ve dutifully pumped into their chequing and savings accounts.