Younger Canadians more likely to increase investing

The shape and pace of Canada’s economic recovery will depend, in part, on consumer spending. New research from Statistics Canada that aims to forecast how spending trends will evolve in the months ahead indicates that younger Canadians are most likely to increase their investing relative to other demographics.

With the gradual easing of lockdowns, consumer spending is picking up; however, StatsCan said the pandemic has changed shopping habits, and heavy job losses have limited spending capacity.

“Many might not be able to [return to their pre-Covid-19 spending habits] because of financial difficulties resulting from job loss, fear of infection and fear of future adverse events,” the study said.

Conversely, “others might increase their spending because of pent-up demand.”

Based on the results of online research conducted in June, StatsCan said Canadians are likely to reduce discretionary spending overall.

“More often where there was an expected change in their spending, respondents said they would spend less than they did prior to the pandemic,” it said.

For example, the survey found that about half of respondents said they plan to spend less at restaurants; about one-third plan to spend less on entertainment, clothing, recreation and ordering take-out.

Most respondents expected to spend about the same amount on groceries, but 19% planned to spend more.

On balance, StatsCan sees an ongoing shift away from dining out and take-out ordering toward more cooking at home and grocery consumption.

Expected shifts in spending vary by demographics, the study found.

For instance, younger respondents (aged 15 to 34) said they were more likely to increase their allocations to saving and investing.

Specifically, the study found that 24.1% of younger respondents said they expected to spend more on investing, compared with 13.3% of those aged 35 to 54, and 7.5% of those 55 and over.

“Higher expected spending on saving and investing among the youth may reflect future uncertainties,” the study said.

StatsCan also found that younger respondents are more likely than other age groups to increase their spending on recreation and entertainment — which, it suggested, may reflect both greater pent-up demand among this age group but also less concern about the health risks of reopening.

Planned changes in spending habits were also related to both the financial and health conditions of respondents.

For example, over half (52%) of people with inadequate incomes planned to spend less on clothing, and 46% said that they would spend less on recreation, StatsCan said.

At the same time, respondents with greater health concerns were more likely to spend less in restaurants.