CRA Update: $40.3 Billion in CERB Money Paid… and Rising!

Since the program was rolled out, CERB has paid $40.3 billion. That’s good news for companies like Dollarama Inc (TSX:DOL).

| More on:
Modern buildings in business district

Image source: Getty Images

Two months after the program was announced, Canada’s CERB numbers are starting to rack up.

According to Canada.ca, there have been 8.2 million CERB applicants and $40.33 billion paid out so far. These numbers represent a sharp increase over late April, when seven million people in total had applied for benefits.

The figures come after months of lockdowns, which have seen businesses closed and Canadians put out of work in record numbers. According to Statistics Canada, unemployment reached 13% in April. Unemployment for May is likely higher, and we’ll get the numbers on that next month.

It goes without saying that all of this is significant for investors. The more people are out of work, the more consumer spending will fall. While the $500 weekly amount CERB pays out is a good lifeline for many Canadians, it does not even replace full-time minimum wage earnings in Ontario. If this situation persists for much longer,  businesses will suffer. The only question is what all it all means for investors.

What eight million CERB applicants means

The first thing to note is that eight million CERB applicants does not equal eight million unemployed. According to Statistics Canada, two million jobs were lost in April and one million in March. More were likely lost in May, but we’ll have to wait until June for official data on that.

Assuming May ends up being similar to April, and no jobs are recovered, then we’ll reach five million jobs lost by the end of the month.

That’s a very high number. And indeed, the most recent published unemployment rate was shockingly high, at 13%. However, there do appear to have been more CERB claims made than jobs lost. This is understandable, since the CRA has been known to approve applications with few questions asked in the name of expediency.

Takeaway for investors

For investors, the rise in CERB claims could suggest economic weakness that won’t be resolved soon. Eventually, unemployment will hit corporate earnings, as out-of-work consumers cut back on spending. That’s bad news for most stocks. However, some could actually benefit from it.

Case in point: discount retailers like Dollarama Inc (TSX:DOL).

Discount retailers specialize in providing low priced goods that everybody can afford. Accordingly, their sales tend to jump during recessions. In the Great Recession, shares of Dollar Tree jumped 200% and Wal-Mart saw its earnings increase.

These were not freak accidents, but consistent with well-established trends: In downturns, discount retailers make more money.

That could be good news for Dollarama shareholders. The company has an 18% share of the discount retail market in Canada and a huge presence nationwide. If cash-strapped Canadians start looking around for bargains, Dollarama will be one of the first places they’ll go. Dollarama stores have low priced offerings in many essential product categories like groceries and kitchenware.

They’d be among the first places to benefit if consumers cut down on spending. The company’s first-quarter results bear that out. The company increased same-store sales by 2% and met guidance on every metric. A solid performance in one of Canada’s toughest times ever.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned.

More on Dividend Stocks

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

Here’s the Average CPP Benefit at Age 70 in 2024

Canadian retirees can supplement their CPP payout by investing in blue-chip dividend stocks such as Enbridge.

Read more »

Gas pipelines
Dividend Stocks

Is Enbridge the Best Dividend Stock for You?

Enbridge now offer a dividend yield of 8%.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how a historical investment in TSX dividend stocks would have fared.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $100 Every Month

Want to earn an extra $100 per month in investment passive income? Here's how much cash you would need to…

Read more »

Canadian Dollars
Dividend Stocks

Buy 1,430 Shares of This Super Dividend Stock for $1,000/Year in Passive Income

Here's how to generate $1,000 in annual passive income with Dream Industrial REIT (TSX:DIR.UN) stock.

Read more »

A worker gives a business presentation.
Dividend Stocks

Ranking Inflation Rates in Canada: How Does Your City Stack Up?

Inflation rates stoked higher for some cities, but dropped for others. So let's look at how your city stacked up,…

Read more »

Doctor talking to a patient in the corridor of a hospital.
Dividend Stocks

Inflation Is Up (Again): What Investors Need to Know

Inflation ticked higher in Canada this month, but core inflation was lower. Here's how investors can take advantage during this…

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Want to Make $10,000 in Passive Income This Year? Invest $103,000 in These 3 Ultra-High-Yield Dividend Stocks

Can you earn $10,000 in passive income in 2024? You can by investing $103,000 in these ultra-high-yielding stocks.

Read more »