Quebec is avoiding the stark economic divide seen in the United States, but consumer pessimism and shrinking savings for low-income households are straining financial confidence, according to an economic study published by Desjardins.
Quebec Economy Avoids US-Style K-Shape Divide
While economists in the United States frequently track a “K-shaped recovery” where wealthy households pull away from a stagnating majority, the economic divergence in Quebec remains far less pronounced, according to Desjardins principal economist Sonny Scarfone. High-income earners in the US account for nearly 60 percent of American consumption, based on data from Moody’s. By contrast, the top 20 percent of earners in Quebec drive roughly 29 percent of consumption. Across Canada, the consumption share of the top 20 percent has actually dropped over a 25-year period, while the bottom 20 percent increased their share from 10 percent to 14 percent. According to Scarfone, Quebec lacks the extreme reliance on top-tier household spending that characterizes a true K-shaped economy, though surging food and housing costs continue to squeeze lower-income budgets.
Desjardins Study Reveals Growing Pessimism and Wealth Gaps
Despite more equitable consumption patterns, consumer confidence indicators in Quebec frequently hover at levels usually associated with a recession, notes Scarfone, who co-authored the analysis with principal economist Florence Jean-Jacobs. The root of this widespread pessimism lies in wealth accumulation and savings metrics. While average savings amounts have climbed across the province in recent years, the actual savings rate for the bottom 60 percent of earners has declined almost annually since 2000. Furthermore, asset accumulation trends show a mild K-shaped divergence emerging since 2020. Before the pandemic, assets among lower-income groups generally grew faster than those of the wealthy, but that dynamic has reversed as more difficult access to property and living costs lengthen the timeline required to build substantial household wealth.
Decades of Saving Required to Climb Wealth Brackets
Climbing the wealth ladder in Quebec now demands significantly more years of disciplined saving than it did a generation ago. Desjardins economists modeled a scenario featuring a median-earning couple aged 25 to 54 to calculate the time required to transition between wealth quintiles. In 1999, moving from the lowest wealth quintile to the third quintile required saving 15 percent of a gross salary for nine years. By 2023, achieving that same transition required more than 20 years of identical savings efforts. Similarly, the timeline required to jump from the third quintile to the top fifth expanded from just over 50 years to nearly 90 years. As Scarfone summarizes, many residents feel that operating under identical economic conditions a decade earlier would yield a markedly more secure financial reality.
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