According to Statistics Canada, government assistance during the pandemic was large, but Canadians borrowed more than they saved in 2020. Meanwhile, economic analysts went to high-income households because some of the government’s pandemic aid was not well covered. You don’t need it.
According to Statistics Canada, one-fifth of the wealthiest households, or the top one-fifth, saved $ 186.61 billion in 2020. This corresponds to a net savings rate of 33.1 percent. That’s a 25.7% savings, well above the $ 137.38 billion saved in 2019. By 2020, this demographic accounted for 89.54 percent of all savings.
In contrast, the lowest quintile, or bottom one-fifth, of the household was accumulated. $ 60.35 billion in debt in 2020,-Equivalent to a net savings rate of -61.4%. This means spending 61.4% more than in 2020.
“It speaks to the rising savings rates of the wealthy, which is in perfect agreement with many other studies that the government has sprayed this money on everyone,” said McDonald’s Laurier. Philip Cross, Senior Fellow of the Institute (MLI), said.
“Many of them went to high-income households that didn’t need this money, which is shown by the fact that these people saved a lot of money because they didn’t need it. It is in a bank account and indicates that this aid was not well targeted. “
The second-highest quintuplet household doubled its savings in 2020, saving $ 66.60 billion at a 19.6% savings rate, surpassing the 9.9% savings rate of $ 31.5 billion in 2019. ..
In the second lowest quintile, debt increased by $ 6.88 billion and net savings were -3.7%. The previous year was even worse, with the lowest quintile accumulating $ 90.14 billion in debt, the second lowest quintile accumulating $ 45.02 billion, and net savings rates of -114% and -28%, respectively.
With government support, the middle class, the third quintile of income, moved to savings in 2020 after a minor loss. The household savings rate in 2020 was 9.1% ($ 22.97 billion), up from -6.9% ($ -15.63 billion) in 2019.
“Probably not the labor and labor shortages we are facing today,” said Cross, a former Chief Economic Analyst at Statistics Canada, if more aid goes through employers. Stated.
Canada “F” economic grade With the September 17th update of MLI’s COVID-19 Misery Index. The index compares 15 countries during a pandemic in terms of the health impact of COVID-19 infections, government policy responses, and the economic impact of a pandemic.
“Canada’s unemployment rate is 7.5%, less than 2% above pre-pandemic levels. Only the United States has shown a more sustained increase in unemployment, but they started at a much lower rate. “The update said.
“Canada has assumed a significant amount of public debt that could take generations to repay. We expect the economy to recover, but GDP will shrink 1.1% in the second quarter of 2021. , The rest of this year’s growth forecast has been revised downwards. “
According to Mr. Cross, the government dealt with only one side of the basic economic principles of supply and demand.
“As is often the case in crises and emergencies, it’s unintended consequences, and in reality the unexpected consequences are big,” he said.
“They lowered interest rates, dumped money from the windows, and demand quickly recovered. What they didn’t realize was that all these actions around the world were causing supply problems and fixing them. Was going to be much more difficult. “
Fraser Institute analysis Announced in August 2020, much of the federal government’s spending on pandemic-responsive programs does not appear to be directed at those who really need it, with an estimated $ 22.3 billion taxpayers. He states that he is wasting resources.