Lack of finance in young people broader warning sign for the Canadian economy
Canadians are feeling gloomy about their personal finances — and Generation Z is the gloomiest of all.
The Nanos Pocketbook Index, a measure of how people perceive their personal finances and job security, fell to 50 last week, matching its April 2020 low. It’s one component of the broader Bloomberg Nanos Canadian Confidence Index, which also gauges the public’s expectations about the economy.
Young people are driving the pocketbook index lower. For respondents aged 18 to 29 — who are mostly members of Gen Z, along with the youngest millennials — the index fell to 40, the lowest recorded in its 16-year history.
The youth index has been in free-fall since the last week of March, down 17 points in just five weeks. The recent sharp deterioration is worse than in April 2020, the depths of the pandemic recession, when Canada’s gross domestic product fell by 10.7 per cent.
Just 11 per cent of respondents of all ages said their personal finances have improved over the past year, the lowest going back to the inception of the Bloomberg Nanos survey in 2008, while 50 per cent say their finances have gotten worse.
In a technical sense, Canada has avoided a recession so far. That’s mostly due to explosive migration-led population growth, which has kept the economic pie from shrinking. The slices have grown smaller, however. On a per-capita basis, the economy has shrunk three per cent since September 2022.
Signs of strain among young people are especially visible in the labour market, where job gains have not kept up with the surging population. Youth unemployment has risen about four times faster than unemployment for all age groups.
In March, Canada’s unemployment rate was 6.1 per cent, up 1.1 percentage points since December 2022. Over the same period, unemployment among 15 to 29 year olds was up 4.3 percentage points to 10.9 per cent. New data for April will be released on Friday.
Financial difficulties among young people are a broader warning sign for the Canadian economy. And they don’t do anything to boost the country’s meager birth rate, since affordability concerns discourage many young couples from starting families.
Canada’s lack of affordability, particularly in the housing market, has led young people to turn their backs on Prime Minister Justin Trudeau. The under-30 crowd now largely favours the Conservative Party, a historical aberration.
Trudeau tried to win those voters back with his youth-focused April budget, but his polling numbers have continued to decline.
This article was first reported by BNN Bloomberg
