Quebec’s net household savings shrank 37.4% in one year, from $42.7 billion in Q3, according to the latest seasonally adjusted data Q3 2021 to just $26.6 billion in Q3 2022, down $16.1 billion.
Québec’s national accounts for the third quarter of 2022, released by the Institut de la statistique du Québec, show that Québec’s household saving rate fell to 8.6%, the lowest rate since Q4 2019, just before the start of the COVID-19 pandemic.
What is the reason for the sharp drop in savings over the course of a year?
The consumption in question
By analyzing the “Household Accounts” data, we see that it is the sharp increase in household consumption spending that is largely responsible for the sharp decline in net savings.
Quebec household consumer spending increased by $26.5 billion, or 9.54%, in a year.
That means Quebecers haven’t been too skimpy on spending, as this 9.54% increase still exceeds the overall inflation-driven rise in prices by three percentage points.
Specifically, of the $26.5 billion increase in consumer spending, at least $18.2 billion would be directly attributable to the impact of inflation on product and service prices.
That leaves $8.3 billion in additional spending that would simply be due to additional spending on pure and simple consumption.
More income, but…
In 2022, households in Quebec shared a gross income of US$380.3 billion, an increase of US$28.1 billion (+8.0%) in one year.
After cash transfers related to public administrations (federal and provincial), personal income taxes, Social Security contributions and other transfers, Quebec household disposable income reached US$310 billion.
That’s barely $9.3 billion more than in 2021, while households earned an additional $28.1 billion in gross income in 2022. In other words, only a third (33%) of the incremental gains stayed in Quebecers’ pockets in 2022.
The very insatiable state
What happened ?
It is the public administrations that have “chewed away” most of the additional gross revenues.
In terms of remittances from Ottawa and Quebec (pensions, allowances, etc.), Quebec households received a total of US$70.9 billion in 2022, or US$5.14 billion less than in 2021.
On the other hand, taxes paid by Quebecers to governments in 2022 reached $116 billion, or $13 billion more than the year before.
In summary, households made more money in 2022 than they did in 2021. However, they find themselves with less net savings in their pockets, mainly due to inflation and governments’ more insatiable appetites.
