Former PIMCO head of Canadian portfolio management Ed Devlin thinks consumers could unleash a torrent of cash into the domestic economy once the COVID-19 pandemic is firmly in the rearview mirror.

In an interview, Devlin said higher-income Canadians could start spending the cash that they have squirreled away once pandemic restrictions on social activities are eased.

“I haven’t spent much in the last six months, relative to what I used to spend, because I can’t go anywhere. I can’t go to a restaurant, I can’t do anything,” he said. “There’s a lot of pent-up demand there that really can explode once the clouds clear and we start to see brighter days ahead.”

Devlin’s comments came on the heels of a CIBC report that said Canadian consumers and businesses are sitting on an unprecedented $170 billion in excess cash. In the report, CIBC said it suspects that cash is largely in the hands of higher-income Canadians, who are saving money that would otherwise be spent on services like dining out.

While data on spending levels by income bracket is not available in Canada, CIBC highlighted a 10-per-cent drop in spending among high-income U.S. households from pre-pandemic levels.

By contrast, CIBC expected less elasticity in the spending habits of lower-income Canadians, both because members of that income bracket were disproportionately impacted by COVID-induced job losses and because more of their income is earmarked for spending on essential goods and services like shelter and food.

Devlin said those divergent realities for consumers should be top of mind as policymakers look to navigate the domestic economy through the disruption caused by the pandemic.

“One of the things that the pandemic has exposed is income inequality,” he said. “People who were struggling before are really struggling now, and we really need to find ways to make sure they get to the other side.”