High inflation quickly eroding 'pre-loaded stimulus': Economist
BNN Bloomberg
The excess savings that built up in Canadians’ bank accounts over the pandemic - and that Finance Minister Chrystia Freeland referred to as “pre-loaded stimulus” - is being quickly eroded by inflation, according to a Bay Street economist
“In today's world, after all of this inflation, you need to adjust those numbers for the purchasing power in terms of inflation. Inflation has eroded or offset the purchasing power of that excess savings,” said Royce Mendes, managing director and head of macro strategy at Desjardins, in an interview on Wednesday.
One report published by CIBC Capital Markets in mid-November 2020 estimated that individuals and businesses were sitting on a collective $170 billion in excess cash as spending was restricted by lockdowns. It was also an amount that was being eyed by the federal government as a way to eventually kick start the economy from the COVID-19 pandemic.
Freeland called it “pre-loaded stimulus” in her fiscal update speech in late 2020 in the hopes that Canadians would unleash that cash once the economy opened up.