“It was the best of times. It was the worst of times.”
The opening lines of Charles Dickens’ novel about the French revolution, A Tale of Two Cities, seem eerily resonant as the pandemic enters its second year.
On one hand, thousands of Canadians are dead, families haven’t seen each other for months, businesses are bankrupt and jobs have disappeared.
On the other, owners of stocks and houses have seen their investments soar. Wages and job numbers are up for professions with above-average salaries. Vendors of things from lumber to fat bikes and snowmobiles are having record years. Meanwhile, many Canadians have dramatically reduced their spending and increased their savings during the COVID clampdown.
One number crystallized this trend. CIBC economists in November estimated that Canadian consumers had accumulated a stunning $90 billion more cash in their bank accounts than one would have expected from pre-pandemic trends.
Most of that cash is in the bank accounts of mid- and high-income Canadians, according to the report. Low-income households reduced their consumption relatively less since most of their spending is on necessities. But more affluent households dramatically cut spending on goods and especially services.
Scaled for the Yukon’s share of population, the national figure above would be $90 million here.
That is a motherlode of consumer cash to be sitting on the sidelines of a retail economy the size of the Yukon’s.
Our number is probably even bigger than suggested just by our share of the population. Although we haven’t (yet) faced the kind of stay-at-home orders and strict retail closures seen in some provinces, spending has still been dramatically affected. Air travel, Outside vacations and restaurant eating are down sharply.
Plus, our average weekly wages were 11 per cent higher than the national average before the pandemic. And the Yukon has far more government jobs as a share of its economy than most provinces. This means a higher percentage of the workforce has avoided layoffs and reduced working hours.
Finally, that surplus cash number was estimated in November. After who knows how many more months until vaccines bring relief, that $90 million cash pile could be tens of millions bigger.
For the Yukon’s retailers, a lot depends on where that money eventually ends up.
Yukoners could decide that the pandemic was a signal to rein in their debt-fuelled lifestyles. The amount of interest Yukon households paid annually rose from $76 million in 2015 to $101 million in 2019. That includes both mortgage interest in our overheating housing market ($58 million) plus other kinds of household debt ($43 million).
After having learned the charms of cooking dinner at home with the family and visiting Kluane rather than Cancun, maybe Yukoners will dial back the consumerism.
I’m not betting this will happen in a big way, however. Low-interest rates make debt literally cheaper than ever. And rising stock and house prices make those with cash feel more comfortable spending. Plus who can resist the lure of a $589,000 one-and-a-half story house in Riverdale or a new Ski-doo Summit deep-powder sled with the 165 horsepower Rotax 850 E-TEC engine?
My guess is most of that money will eventually get spent. The big question is where.
There are a few likely suspects.
One is a surge in Outside travel, once lockdowns subside in the provinces and international restrictions are lifted. Other countries will follow the lead of Seychelles in offering special treatment to tourists who have been vaccinated.
This will be offset by incoming visitors to the Yukon. However, much depends on the timing. If we lift our restrictions this summer we could see a surge in tourism by vaccinated Canadians. But if we aren’t able to lift until next fall, outgoing travel will surely outpace incoming.
Another factor is e-commerce, with Yukoners buying digitally from big internet vendors rather than local stores. This is a longstanding retail trend but has been accelerated by the pandemic. Many retail experts believe that e-commerce has been permanently ratcheted up.
After all, Yukoners have spent a year developing the habit to order online for categories where they used to shop in person. Those who signed up for Amazon Prime during the pandemic have learned you can order everything from your Starbucks coffee beans to home-renovation tools with no delivery charge.
This is good news for Amazon and MEC, but worrying for downtown retailers.
Yukon services providers are in a better situation. Even though you bought a Flowbee Home Haircutting System during the pandemic, you probably are keen to return to your favourite in-person hairstylist. Plus, after the pandemic, the social aspect of services such as fitness classes will be attractive to many.
But even with services, there will be long-term effects. Although Flowbee purchasers might return to the barbershop, people who bought home-exercise equipment may be less quick to return to the gym.
That $90 million is a big opportunity for Yukon retailers. But Outside travel and the internet are tough competitors. For many sectors, it won’t be good enough to just return to 2019 business as usual. It will be critical for flourishing in the post-pandemic world to tune up product offerings and adapt services to the habits Yukoners developed during the pandemic.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist and received the bronze for Outstanding Columnist in the 2019 Canadian Community Newspaper Awards.