Canadians are hoarding cash.
According to a new report by bank CIBC, the Covid-19 pandemic has pushed Canadians to accumulate the largest amount of cash ever recorded. Canadian households and businesses are holding on to more than $170 billion in excess cash, the report estimates.
Households are sitting on $90 billion of cash, which is equal to 4% of consumer spending, while businesses are holding on to $80 billion of cash. The report also said the savings rate for households was likely about 13% in the third quarter, compared to about 3.6% before the pandemic.
CIBC forecasts that household cash hoards will grow further. The report said consumer spending is set to slow down in the coming four to five months with the pandemic overlapping with flu season.
Meanwhile, Canadian businesses are growing their cash positions by almost 15% year-over-year, the report said. The government’s Canada Emergency Business Account loan program is boosting firms’ cash hoards, with many companies keeping the money in deposit accounts and possibly using it as future insurance.