Household consumption drops for first time since financial crisis: StatsCan

Covid-19 restrictions led to the first drop in total household consumption since the financial crisis, according to new data from Statistics Canada.

The national statistical agency reported that actual household consumption — which includes spending on goods and services, along with transfers in-kind from both governments and non-profits — dropped by 3.2% in 2020, representing $52.8 billion decrease.

“The decline was driven by the decrease in household final consumption expenditure, as shutdowns implemented to curb the spread of Covid-19 limited household spending,” StatsCan said, adding that the decrease was the first since 2008.

A decline in household spending, particularly in the first half of 2020 amid pandemic restrictions, was partly offset by a surge in government transfers in-kind, which rose by 5.1% during the year.

StatsCan said that this was the largest increase for in-kind government transfers since the financial crisis too.

Older households (those aged over 65) received the largest share of health-related transfers, whereas working-age families accounted for the bulk of education-driven transfers.

The drop in consumption came as household disposable income soared by 8.8% in 2020 to $1.8 trillion, StatsCan noted.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.