Reduced spending on entertainment, traveling and health care have combined with government support programs to boost Canadians’ savings by approximately $180 billion, according to a Bank of Canada directors address March 11.

Deputy governor Lawrence Schembri’s virtual address to Restaurants Canada began with some sympathy for the beleaguered industry, which he said has “borne a heavy burden” citing tens of thousands of job losses, and thousands of closures. While noting those job losses and financial hardships affected Canadians in general, he also noted that overall household savings grew.

Schembri said the bank has estimated that these “forced” and “precautionary” savings of consumers total $180 billion, enough to “meaningfully affect the trajectory of the economy.” While the impact of the pandemic included unprecedented losses in jobs and income, it also reduced spending.

“However, extraordinary fiscal support more than offset these income losses, so on balance, household income increased. When you couple this increase with the drop in spending, household savings rose dramatically,” he said. In total, the disposable income of the average Canadian rose by $1,800 in 2020. Further, “lockdown measure and fear of the virus kept wallets shut,” and Canadians spent about $4,000 less in 2020 because of the pandemic.

The impact was not split evenly across the economy. Bank research suggests that 40 percent of the extra savings went to high-income households, while low-income households accumulated less than 10 per cent of the savings.

Schembri said most of the extra savings is “sitting in bank accounts”, while some survey data said some Canadians chose to pay down debt or to make purchases of homes, “likely by higher income earners.”