Millennials, Gen Z Left Behind By Canada’s Recovering Economy
Canada’s economy is said to be rebounding, but the recovery appears lopsided.
A Q4-2021 report from TransUnion revealed that 36% of consumers’ household incomes have been adversely impacted by the COVID-19 pandemic, however, millennials and Generation Z, in particular, have felt the squeeze, with 44% and 41%, respectively, reporting reduced household income because they’re more likely to be in jobs directly affected by lockdowns and capacity restrictions.
Still, these younger demographics expressed optimism about their prospects, as 39% of Gen Z and 27% of millennials whose household incomes declined at some point since March 2020 believe their finances will subsequently ameliorate. In fact, 61% of Gen Z and 51% of millennials are optimistic that their financial situations will improve in the next 12 months.
Sixty-six percent of respondents had neither quit nor been laid off from their jobs during the quarter, but among those who reported otherwise, trepidation about COVI-19 was the most cited reason, TransUnion noted.
Despite younger income earners reporting more financial duress, the Canadian economy is, indeed, showing signs of recovering. During the first quarter of the year, 31% of respondents reported difficulties making full bill and loan payments, while that figure dropped to 27% during Q4. The most common loans consumers struggled the most to repay were student, personal, and business loans, as well as credit cards.
Forty-five percent of respondents intended to taper their non-essential outlays over the following three months, which also included holiday shopping — 40% indicated they planned to spend less money this year, while 46% saw no need to curtail spending. Credit card payments were also the preferred method of payment for 41% of respondents.
Consumer confidence has improved, albeit not significantly: in Q1-2021, 79% of respondents indicated they would save money for unexpected setbacks, while 75% reported similar intentions by the final quarter of the year. Moreover, TransUnion speculated the reasons for improved consumer confidence are that consumers have mostly realized their savings goals and news of economic recovery has instilled optimism about their futures.
But 73% of respondents indicated that access to credit was crucial, if not at least necessary, while 52% reported satisfaction with their current credit products. Nearly a third of respondents who said they considered applying for more credit or refinancing existing credit ultimately decided not to because they believed they would be rejected.