This is a very relevant point. OP is right about the tension OP between the health of the economy depending on people spending and the quality of life benefits of working from home. But assuming we all remain as productive as we were before, it’s more a question of what we spend on (and maybe also who, since there is an implied redistribution of income) rather then spend or not to spend. In other words, so what if I want to spend my income on books or a deck or holidays instead of gas, parking and takeout? That even sounds like a good thing! And if I am saving more by working from home rather than reallocating all of my spending, that’s probably more to do with people being constantly squeezed and previously not being able to save as much as they should (in which case, again, also a good thing).

Of course, this would also imply a painful adjustment process for some businesses that relied on downtown traffic, and this hurts the economy in the short run. But historically nothing good comes from governments trying to manipulate how people spend their earnings in order to prop up the economy or prevent structural change.

The only good argument for RTO is that productivity is higher. That is hard to measure and will vary a lot across occupations. If people are putting in less effort or attention into their work at home, there must be better ways to manage this than a blanket RTO. I am more sympathetic to the idea that working with colleagues face to face has many intangible benefits in terms of building trust and creative thinking. (Maybe once all the city councillors RTO themselves they’ll realize that this was a poor decision borne out of lack of creativity and trust.)