If You Open It, They Will Come: BMO Economics Releases Canadian Consumer Outlook

• BMO encourages Canadians to support their communities by spending at local small businesses

TORONTO, Dec. 11, 2020 /CNW/ - Household finances during the COVID-19 pandemic in Canada have shown remarkable strength relative to previous downturns – courtesy of historic government support – and Canadians appear ready to spend as soon as they are able, according to a new outlook for the Canadian consumer from BMO Economics.

"Canadians' financial health is highlighted by a mountain of $150 billion in excess savings," said Doug Porter, Chief Economist, BMO Financial Group. "We believe households will need little policy prodding to ramp up spending on services, when health circumstances allow; witness the speed and vigour with which consumers returned to stores and malls during partial re-openings this summer. We look for spending to rebound almost 6 per cent in 2021, and by more than 7 per cent when inflation is factored in."

The report noted significant changes to household shopping habits over the course of the year. "Perhaps the biggest winners of all were online retailers, with ecommerce sales more than doubling at the height of the lockdown and remaining elevated – up 74 per cent year over year in the third quarter," noted Mr. Porter. "Meanwhile, the ability to work from home gave consumers an insatiable demand for furniture and household equipment, up 10 per cent year over year. At the other end of the spectrum, it's no surprise that spending on hotels and restaurants – down 54 per cent and 22 per cent year over year respectively – eroded heavily."

Of note, massive government support, mortgage deferrals and a double-digit savings rate of 27.5 per cent in the second quarter (compared to last year's average rate of just 1.4 per cent) have combined to improve many measures of household financial strength. "The household debt-to-income ratio has taken a big step back this year after hovering near all-time highs" stated Mr. Porter. "Debt service burdens also eased considerably with interest rates slashed to record lows. Meanwhile, rising real estate values have been an important driver in improving household net worth in 2020."

"While the pandemic continues to pose significant challenges, Canadians have demonstrated financial resiliency while achieving an unprecedented level of savings," said John McNain, Head, Personal Banking Products and Experience, BMO Bank of Montreal. "As we look ahead to brighter days, we encourage Canadians to continue their support for local small businesses in their communities. Continuing to prioritize support for local communities will go a long way to supporting Canada's recovery and continued resiliency once the economy re-opens."  

The full report is available at https://economics.bmo.com/en/publications/detail/213ea8f1-6f81-4416-bb90-bafefb57968e/.

About BMO Financial Group 
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $949 billion as of October 31, 2020, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

SOURCE BMO Financial Group

For News Media Inquiries: Peter Scott, BMO Financial Group, Toronto, [email protected], [phone]; James DeCosimo, BMO Financial Group, Toronto, [email protected], [phone]