Canadian households are buying more, with spending up about 2 percent in the first quarter of 2026, but many are spending more than they earn, a new report indicates.
Except for top 20 percent of earners, the increase in spending isn’t coming from income but being covered by savings, borrowing, and growth in households’ investment portfolios. In addition, much of the higher spending isn’t going toward buying goods but rather toward financial services linked to borrowing and asset-linked fees, a report by the Boston Consulting Group, published July 9, indicated.
Spending on essentials has remained the same, the report said, adding that are purchases of durable goods such as cars, furniture, and appliances are falling.
The report analyzed the rise in Canadian household spending between 2021 and 2025, finding that spending was up 24 percent for the top 20 percent of earners, up 19 percent for the middle 60 percent, and up 27 percent for the lowest 20 percent of earners.
Only the top 20 percent of earners saw disposable income growth that fully supported their spending growth, covering 106 percent of their increased spending. For the middle 60 percent of earners, their income growth only covered 57 percent of their new spending. For the lowest 20 percent of earners, almost none of the increase in their expenses was covered by their increase in income.
“With income up by just 3 percent, the rest came from somewhere other than their paycheques,” the report says of the bottom income group.
Between 2021 and 2025, while the top 20 percent of households saved more over that period, with annual savings rising about $16,000 per household, the rest of Canadians saw their savings decline. The middle 60 percent of households by income had saved a modest amount annually up until 2021, but since then have seen their annual savings falling by roughly $7,000 per household. The lowest 20 percent saw their annual savings fall by some $15,000 per household.
Boston Consulting Group says the findings are reflected in its Global Consumer Radar Survey, which indicates that 41 percent of Canadians say they either do not expect to save money or expect to save less over the next six months.
The group says the findings are partially due to the makeup of the lowest-income group, including retirees, students, households with temporarily unemployed individuals, and others who may have a low current income but may still be able to spend by drawing on savings, family help, or borrowing.
For the top 80 percent of households, gains in their financial assets in recent years, primarily in the equity markets, have likely either offered confidence to keep spending or provided additional equity to borrow against. This group saw growth of between 13 percent and 26 percent over the period from 2021 to 2025, even though income growth hasn’t fully kept pace with spending for the middle 60 percent.
Meanwhile, the bottom 20 percent has seen their total assets decline by 2 percent as they’ve had to sell assets to support their spending growth.
Credit is being used to fill more of the gap. The middle 60 percent saw the fastest growth in liabilities, which rose 22 percent over the five-year period. Much of the wealth of households in this group is tied up in homes and other illiquid assets, which they cannot easily converted to cash, leaving them more exposed to the rising cost of servicing debt.
Middle-income consumers may become more selective and deliberate about their purchases, while overall consumer demand may become more sensitive to interest rates and household capacity to shoulder more debt, the report says.
The report’s findings mirror recent Statistics Canada data indicating that net saving worsened in 2025 for lower-income households as spending rose. The StatCan report, released in April, also said that the wealth gap in Canada increased as the wealthiest benefited the most from strong gains in the equity markets.
