As Canadians look to Ottawa to repair an economy ravaged by COVID-19, there’s a growing focus on our savings accounts as a source of potent fiscal stimulus just waiting to be “unleashed.”
Bay Street economists estimate businesses and households are sitting on upwards of $170 billion in excess cash. It’s an eye-popping figure the Trudeau Liberals are taking notice of, with no less than five references in the Fall Economic Statement to “unleashing” that money.
“I do see the cash mountain, in both Canada and the U.S., as a serious source of potential upside to next year’s growth,” Doug Porter, chief economist at BMO Capital Markets, wrote in an email.
“I believe there is a strong case for a powerful comeback next year – if you open it, they will spend.”
While much of the focus of the fiscal update was on supports to get businesses and workers through the immediate challenges of COVID-19, the document did cast an eye to the recovery period with a pledge to commit up to $100 billion in stimulus over three years.
Of course, that additional stimulus, when it comes, would only add to Canada’s mounting debt pile – which is set to push past $1.2 trillion as the country goes deep into deficit spending battling the pandemic.
So it’s easy to see why our savings accounts are creating such a stir.
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