$300-BILLION OF EXCESS SAVINGS 💰 THATS WHAT THE CANADIANS ARE SITTING ON…….WHAT HAPPENS NEXT IS ANYONE’S GUESS.

By Chandrayee Roy Choudhury, Canada: Paul Bannister is making up for lost time.



He has just returned from 10 days of “island hopping” in the Bahamas with his wife and kids, a longer vacation than he’d normally take. Back home in Pickering, Ont., just east of Toronto, the family often goes out to pricey restaurants – steak dinners are a popular choice – no matter the sticker shock on menus.



Like Mr. Bannister, many Canadians amassed exceptionally large amounts of savings during the pandemic. The countrywide total is a hefty – and somewhat mysterious – sum of money that continues to grow. Some of Canada’s major banks have pegged excess savings over the past two years – that is, savings above typical levels – at roughly $300-billion.



No doubt, that money comes with far-reaching implications for the economy. Deputy Prime Minister Chrystia Freeland has referred to savings as “preloaded stimulus” to power the country’s economic recovery. Troubled service industries, such as tourism and restaurants, are counting on a summer surge of revenue after a brutal period of meagre sales.



 The Bank of Canada estimates that $40-billion in excess savings will be spent by the end of 2024, but doesn’t attach much confidence to that forecast. There is undeniable upside to higher spending, but also risk. For instance, if Canadians splash out in the coming months, that could give an unhelpful boost to inflation, already running at a three-decade high.