A Canadian recession in 2023 would be new and difficult territory for Generation Z, leading to debt defaults in the short-term and more maturity for life’s journey thereafter..Generation Z was born 1997 to 2012 followed the Gen-Y or Millennial Generation, born 1981 to 1996. The economic downturn of 2008 was prior to Gen Z’s working years, while the pandemic-related recession of 2020 included generous taxpayer-funded supports. However, the Royal Bank, Deloitte, Desjardins, predict a Canadian recession for 2023. David Doyle of Australia’s Macquarie Group told BNN Bloomberg on September 30 the “almost inevitable” recession “will be pretty severe in Canada.”.Rafael Gomez is an associate professor of employment relations at the University of Toronto. He says Gen-Z lacks a historic perspective and has only seen easy credit, low interest rates, and printing money to solve financial crises. Although inflation and higher interest and mortgage rates will be tough to weather, shortages will keep some doors open for young labourers..“People aren't even going out of their way now to have excessive demands, they just want the stuff they had before, to get a coffee, go to a supermarket, and they're finding it difficult to even get that. Store hours are much more reduced. Products are hard to get. So the supply side is the real issue,” Gomez said in an interview with Western Standard..“Right now, labour is the thing that can't be replaced. And new labour market entrants are vital.”.An online survey conducted in June by Angus Reid showed 30% of Canadians 18-34 expect they’ll have to rely on their children for financial support when they get older, compared to 18% for those 35-54 and 15% of those 55+..Ian Lee, a former banker and current professor of business at Carleton University says most people early in their working years haven’t had a chance to accumulate wealth. .“You have very low income because you're just starting out, and you have no assets — unless you have inherited wealth, which most people don't. And you go deep into debt to buy things, to buy cars, to buy furniture. As the years go by, your income goes up, and you buy a house and then you slowly pay down your debt,” Lee told the Western Standard..Unfortunately, debt is the last thing someone wants to have as cost-of-living increases make saving or debt repayment difficult before higher mortgage and lending rates make it even worse..“Credit card delinquency does go up dramatically in a recession because that is unsecured debt. The mortgage delinquencies go up far, far less. The last thing anyone defaults on is their rent or their mortgage because they've got to live somewhere.”.Lee says young workers have the kinds of jobs more likely to get axed in a recession. It’s not the Great Depression, but it could be depressing..“If you've never ever gone through deprivation. If you've never gone through a recession, it does no good to say, ‘Well in the past there were recessions that are worse than this.’ Young people don't appreciate that. And so it is going to be a shock,” Lee said..“Yes, we will go through a recession. Yes, the youngest people generally are hit the hardest because they have the least resources and least experience in the job market. But the good news is it won't be that deep, and it won't be that long, and they will recover and things will be better for them.”.Lee said he lost a job in his youth during a recession and it compelled him to pursue further education. He believes recession setbacks will do the same for Gen-Z..“You're young, and you're impressionable, and so I think the experience is more compelling. It has a deeper impact on their psyche. And it does harden them and mature them because they realize, you know what, life is not a complete picnic or a beach all the time. And I've got to start looking after myself and making plans for the future so the next time this happens, I won't be caught off guard.”.Gomez says Gen-Z could face some “cognitive dissonance” as life looks less like what they hoped it would be. He says some will make the adjustments required to pursue their dreams by action, while others will settle for less in rationalization..“You can change actions so they match your self concept. That takes work and effort. Maybe you have to move to Alberta now. You’ve seen the ads that young people can find a home for 400,000, they can find jobs,” Gomez said..“A much easier route is to change your self-concept and just accept less, and say the whole while that's what you always wanted. That's called rationalization. So when forced between action and rationalizations, most humans choose the easy path. Like water, it runs the easiest course downward. And that's rationalizing.”.Gomez said when basic needs are threatened, settling for less stops being an option. That’s when counter-movements begin..“You can't rationalize away the fact that you can't eat, or you can't afford the basic necessities of life,” Gomez said..“There is a material line of well being that, if it falls below, you can't rationalize. And then you get angry. And then you either personally react or collectively react. Collective reactions are like the Occupy movement of a decade ago, which was young people in their 20s then, who reacted to the financial collapse.”.Gomez believes behind the recent economic challenges are the competing visions of those who believe in freedom and prosperity and others who want a Great Reset and less consumption to “save the Earth.”.“There's other issues here. It's not just an economic question. It's also about I think, determination of who is trying to shape the way that society runs,” Gomez said..“It should be more out in the open. There's some people who are not coming out of the woodwork to say it, but they would be happy with this situation.”
