Canadians and Americans both saved money during the pandemic, but only Americans have spent. Why?

Tuesday, February 20, 2024 - By John Mazerolle

Here’s what you need to know to get the day started:

Canadians and Americans both saved money during the pandemic, but only Americans have spent. Why?

There's a lot of money that could be spent, which would benefit the economy, but that's not happening, says Charles St-Arnaud, chief economist with Alberta Central. (Justin Pennell/CBC)

The massive savings stockpile Canadians squirreled away during the pandemic is not being spent, so it can't be counted on to help the country avoid a possible recession this year.

Those pandemic savings ballooned to over $300 billion, and economists had expected there would be a big boost to the economy when all that money was eventually spent. But today, that sizable stimulus still hasn't happened. Experts aren't sure exactly why.

The savings did help the economy, but not nearly as much as envisioned, and the bulk of the money is still sitting in bank accounts. To this day, total household savings are still about $350 billion more compared to before the pandemic began, according to Statistics Canada.

Lower- and middle-income households spent much of what they saved during the pandemic, while higher-income households have actually saved up more money, experts say. The amount has stayed relatively consistent over the last year or two with little indication of a big spending splurge to come.

"The question is: When does that richer cohort decide to use it?" said Charles St-Arnaud, an economist with Alberta Central credit union. "There doesn't seem to be an inclination to increase consumption." As a result, the massive savings stockpile can't be counted on to help the country avoid a possible recession this year. There's also no cushion for lower-income households that continue to feel the financial pain of a higher cost of living.

"We're still going to see a bit of a pullback in consumption at the beginning of this year until the Bank of Canada starts cutting rates," said Carrie Freestone, an economist with RBC.

By comparison, Americans also saved up plenty of money during the pandemic, but they spent it. Overall, the American economy has performed much better than experts had predicted. Calculations vary about how much of the pandemic savings is left in the U.S., but the majority of Americans don't have any of the money left to spend, according to the U.S. Federal Reserve.

The theories why Canadians have scrimped while Americans spent include fewer lockdown measures in the U.S., an overall higher debt load for the average Canadian and the U.S. practice of 30-year, locked-in mortgages.

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Read the full story here.

Business insolvencies shot up by more than 41% last year, as pandemic debts mount.

Rent hits another record high in January as average asking price reaches $2,196.

The Boys of February

(Frank Gunn/The Canadian Press)

Toronto Blue Jays pitcher José Berríos warms up during spring training action in Dunedin, Fla., yesterday.

In brief

A Montreal woman is using GoFundMe to get herself new hips because the public waitlist is too long. Jaya-Lilas Payette used to manage her juvenile arthritis with medication, but about a year ago the drugs stopped being effective. She was referred to an orthopedic specialist in November and told it could take up to three months to get an appointment. She still hasn't received a consultation. "I call every week, crying, almost screaming because I can't endure the pain anymore," said Payette. "I'm not even on the list yet in the public system." Desperate, Payette's family called a private clinic and got a consultation with a surgeon the following day. They can't afford the $35,000 so they're attempting to crowdfund it. "That shouldn't happen, but that's where we are now," said Dr. Véronique Godbout, president of Quebec's Orthopedic Association. According to Quebec Health Ministry data last month, there were 170,829 patients waiting for surgery. Patients waiting for orthopedic surgery remain the hardest hit, with almost 42,000 on the waiting list. As of Jan. 27, more than 13,000 Quebecers had been waiting more than a year for all types of elective surgery — including orthopedic. Read more about the waiting lists here.

More than a year and a half after receiving proposals to ramp up production of artillery shells, the Canadian government is still debating whether to make investments in plants in Quebec and Ontario. Defence Minister Bill Blair says he's had discussions but has not signed any deals. "The current ammunition situation is unacceptable in Ukraine," Blair said. "It's unacceptable for NATO. Unfortunately, it's something that we got to fix." Blair said there are both supply chain and research issues. Christyn Cianfarani, president of the Canadian Association of Defence and Security Industries, said the proposals have languished for a while and she suspects it's because the issue of ammunition production doesn't suit the government's domestic-focused agenda as the 2025 election nears. No one can pretend that the $400-million investment "is not a big chunk of money," Cianfarani added, but "we made commitments to the rest of the world that we would ramp up our capacity, and we have Ukraine literally begging Canada to do something about ammunition production for them. I think, you know, we need to do the right thing." Read more about ammunition production here.

Canada's senators have been issued panic buttons as concerns about the safety of members of Canada's upper house pile up, CBC News has learned. Senators have been targeted by online harassment campaigns and threatening phone calls in recent weeks. In November, Conservative Sen. Don Plett's car was surrounded by pro-Palestinian protesters who banged on the windows and climbed onto the hood of his car while he was headed to a Conservative caucus meeting on Parliament Hill. Sen. Peter Boehm, a career diplomat, said senators once thought they were shielded from the kinds of security risks sometimes faced by members of Parliament. "All that I have noticed in my time in the Senate is that the threat levels have increased," he said. "The personal safety of senators is a concern." Boehm said senators first began to feel the security environment had changed during the convoy protest that paralyzed downtown Ottawa for weeks in early 2022. "I got hassled a few times, but I'm a tall white guy," he said. "Some of my colleagues, reflecting the diversity that the Senate now reflects, brown or black or women, wearing masks, they were significantly hassled." The Senate and the Parliamentary Protective Service have refused to say what prompted the decision to offer senators panic buttons, or how much the measure is costing. Read about Senate safety here.

Could Pornhub be blocked in Canada? The owners say they're considering it. The company is trying to persuade parliamentarians to reject an approach for age verification outlined in a controversial Senate bill. "We've taken different options in different jurisdictions," said Solomon Friedman, a partner and vice-president of compliance at Ethical Capital Partners, which owns Pornhub's parent company, Aylo. "I don't want to speculate on [the bill] in its current state. We're going to committee to ensure that the wrong legislation doesn't get passed." A House of Commons committee is set to study legislation proposed by Independent Sen. Julie Miville-Dechêne that would require Canadians verify their age to access porn online. The bill outlines a range of concerns about minors having access to sexually explicit material, including the potential to develop a pornography addiction and the reinforcement of harmful gender stereotypes. But privacy experts have concerns about the overarching impacts of age verification, from the risks associated with asking Canadians to share personal information with an external provider to the use of measures such as facial recognition technology. Read more about the online porn bill here.

Canadians can begin filing their income tax returns, with several changes in store for the 2024 tax season. Most Canadians must file their tax return by April 30, which is also the deadline to make a payment for those who owe money to the government. Canadians who are self-employed, along with their spouses or common-law partners, have until mid-June, though self-employed Canadians must still pay money owed to the Canada Revenue Agency by the April 30 deadline to avoid paying interest. Among the changes this year: It's the first time taxpayers will be able to enter deductions on the First Home Savings Account (FHSA), a type of tax-free account rolled out by the federal government last year to help Canadians save on their first home. Canadians might also notice that the temporary flat-rate method for claiming employees' home office expenses — such as rent, electricity, internet and office supplies — is no longer available. Read more about the 2024 tax season here.

Now here's some good news to start your Tuesday: A Nova Scotia woman saw some big problems in the world, so she started something small. Dawn Langille of Terence Bay created the Tiny Parade for Kindness in 2021. She said she felt the weight of issues like the pandemic, political unrest, inequality and climate change, and wanted a diversion. At first the Tiny Parade was just friends and family, but has now grown to be a public event that welcomes community members of all ages. "It is a rally to encourage people to get together for something positive and good, to help our mental health in difficult times," Langille said at the parade yesterday. Her four-year-old daughter, Lily Cole, loves it too. "This parade does make me happy," she said, "because we're all together and that's what being happy mostly is." Langille wants her local parade to stay small, but she hopes the idea will spread to other communities who can start their own tiny parades for kindness. Read more about the tiny parade here.

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Today in history: Feb. 20

1938: British Foreign Secretary Anthony Eden resigns to protest the Munich Pact with Germany's Adolf Hitler.

1945: The federal government issues Canada's first family allowance cheques.

1959: Prime Minister John Diefenbaker cancels the Avro Arrow jet program. The decision resulted in the layoff of nearly 14,000 people at the Avro plant at Malton, Ont.

1980: U.S. President Jimmy Carter formally advises the Soviet Union that the U.S. would boycott the Summer Olympics in Moscow. Canada also boycotted the Games.

(With files from CBC News, The Canadian Press, The Associated Press and Reuters)