HALIFAX, NS – A new study released today shows a low rate of household savings by Maritimers. While New Brunswick has an improved savings rate from the previous decade (following a modest upturn throughout Canada), Prince Edward Island’s household savings have remained constant. Meanwhile, Nova Scotia’s have worsened, with an average annual savings deficit of over $1,000.
Household Savings in Atlantic Canada, 1981-2015 is authored by Jackson Doughart, Research Coordinator at the Atlantic Institute for Market Studies (AIMS) and Dr. David Murrell, Honorary Research Professor in Economics at the University of New Brunswick.
In the 1980s, the average Maritimer saved about $1,300 every year, or 14 percent of his or her disposable income. Today, Maritimers are in “dis-saving” territory: households from 2011 to 2015 spent $406 more, per year, than they saved, including pension contributions and investments.
The research paper reports historical consumption, income and investment information, gleaned from Statistics Canada databases and provincial accounts. Beyond the often-cited ratio of consumer debt to income, this paper adds new metrics to the discussion of personal finances in the region.
The paper evaluates provincial savings trends in two ways:
1) an “unadjusted” savings rate that compares disposable income with consumption, and,
2) a net savings rate that accounts for pension contributions.
The study finds that average personal savings rates dipped throughout Canada during the 2001-2010 period, but have modestly improved since 2011. This is consistent with economic recovery following the Great Recession. In the Maritimes, however, only New Brunswick has an improved rate from the previous decade. Prince Edward Island household savings have remained constant while Nova Scotia’s have actually worsened, with an average annual savings deficit of over $1,000.
“Doughart and Murrell’s paper confirms worries about personal finances in the region,” said Dr. Marco Navarro-Génie, President & CEO of AIMS. “Household Savings in Atlantic Canada suggests that many families experience persistent annual deficits – many doubtless financed by debt.
“Creating the economic conditions to improve these trends should be a priority of public policy,” added Navarro-Génie.
AIMS is Atlantic Canada’s only independent public policy research organization, publishing peer-reviewed studies on a wide range of topics, including healthcare, education, public finance, energy and trade. The Institute supports a free-market economy and sound public policy. Unique among regional think tanks, it operates entirely free from government subsidy.
>>> Read the study