People under the age of 35 in Canada were
faster than any other age group in recent years, economists say, but those gains may be in jeopardy.
Since the start of the pandemic, young households have doubled their net wealth, largely due to increased financial assets, according to the report.
During the COVID-19 lockdown, young Canadians were able to bolster their financial reserves thanks to government assistance such as
Canada Emergency Response Benefit (CERB)
. A roaring stock market and the intergenerational transfer of wealth have boosted returns, just as the pandemic has sent property values soaring.
Not only did their assets increase, but their liabilities also decreased. Their age group is the only one showing a decline
from 2020.
Those who bought a home during the pandemic benefited from rising prices and rock-bottom interest rates; others avoided mortgage debt altogether.
“By delaying or foregoing home purchases due to affordability constraints, some young households are avoiding new mortgage debt, while those who own properties are maintaining pandemic-era price gains,” wrote RBC economist Rachel Battaglia.
But here's the rub. At the same time, as young people accumulated wealth, they
slowed down.
Youth disposable income growth has been the lowest of any age group over the past four years, rising just 18 percent. That's 16 percentage points lower than Canadians aged 45 to 55 and eight points below the national average, Battaglia said.
“This makes people under 35 the only group where income growth is not keeping pace with inflation,” she said.
Why is this happening? Young people, who often work in industries vulnerable to economic shocks such as retail, hotels and restaurants, are among the first to suffer from a weakening labor market.
Almost 40 percent of Canadian growth
in recent years have come from young workers, many of them recent graduates, who have been unable to find work. The employment rate for those under 35 will decline by three percentage points compared with 2020, “indicating a decline in the share of young people earning income from employment in Canada,” Battaglia said.
This jeopardizes the growth in prosperity of the younger generation caused by the pandemic.
“The gap between the income and wealth of young Canadians raises important questions about their financial security as housing and equity markets normalize and the momentum from previous government support continues to fade,” the report said.
There are already signs that this is happening. Wealth accumulation among households under 35 has slowed more than among any other age group in recent quarters.
RBC's forecast that the labor market will pick up gives hope that further deterioration in the well-being of Canadian youth can be avoided, but this is a situation that their economists plan to monitor closely in the future.
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Is
Are they really stealing jobs?
There are signs that this is starting to happen in the United States.
Today's chart shows how office employment, which is more susceptible to the impact of AI, peaked in 2023, shortly after ChatGPT was publicly released in late 2022, said TD economist Ksenia Bushmeneva.
Since then the matter has stalled.
On the other hand, employment among non-office workers continues to grow.
Jobs in administration and support services, where automation using GenAI can easily replace entry-level roles and tasks, have now fallen below pre-pandemic levels.
- US markets closed for Thanksgiving
- Prime Minister Mark Carney will speak at the Calgary Chamber of Commerce about the government's plan to strengthen Canada's economic independence, competitiveness and productivity.
- Today's data: Canada current account balance
- How northern Quebec's 'unique industrial utopia' is challenging Trump's tariffs
- Does your financial advisor really put you first? Maybe not in Canada
- Howard Levitt: Why the purge of 700 Bell Canada managers is a master class in mass layoffs
Renting in Canada can no longer be a short-term transition to home ownership. According to a recent report, the average renter in this country is now over 30 years old, and many have children, suggesting that many Canadians are renting later in life. The Financial Post looks at what a typical Canadian renter looks like and why lifetime tenancies could become a bigger phenomenon in the expensive housing market.
Interested in energy? FP West's subscriber-only newsletter, Energy Insider, brings you exclusive reporting and in-depth analysis of one of the country's most important sectors.
McLister on mortgages
Want to learn more about mortgages? Mortgage strategist Robert McLister
can help you navigate a complex sector, from the latest trends to funding opportunities you won't want to miss. Plus check it out
for the lowest national mortgage rates in Canada, updated daily.
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Today's Posthaste was written by Pamela Haven with additional reporting by staff from the Financial Post, The Canadian Press and Bloomberg.
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