While the outcome may have been more positive than expected, Liza Akhvledziani Carew stresses the tough realities many families still face
The Canadian economy finally produced some good news. May’s Labour Markey Survey from Statistics Canada found that the economy added 88,000 jobs and unemployment fell to 6.6 per cent. Coming off the heels of a technical recession announced last week, there’s plenty in the report to give observers and advisors some hope. There were noted drops in metrics that had been challenging for the Canadian labour market for some time, like youth unemployment, which fell by 0.9 per cent, and full-time employment, which rose by 154,000 jobs.
The report was unexpectedly positive, and a pleasant surprise for many observers. Liza Akhvledziani Carew, however, stresses that a strong month of data may not yet translate into a meaningful improvement for individual Canadian households. Akhvledziani Carew is the CEO and co-founder of Chexy, a Canadian-based payments platform. She highlighted that, despite improvements, youth unemployment remains significant and the strains placed on many Canadian families are still quite acute.
“It’s encouraging that the job market is overall holding up and strengthening even despite the Bank of Canada saying we’re in a technical recession. But it still hasn’t really made up for job losses since the beginning of the year. So sure, there’s been like stronger job creation than we expected, but on a macro level since the beginning of the year and certainly over the last couple of years we’re still not quite fully recovered,” Akhvledziani Carew says. “I think one of the things that we think about and one of the most concerning things for me going forward is that youth unemployment is still so high.”
The improvement in youth unemployment barely chipped away at a historic high level. Youth unemployment remains elevated at 13.4 per cent, and if job creation slows Akhvledziani Carew is concerned for the wider ripple effects on the Canadian economy. That statistic, she says, represents the experience of countless new grads who “did everything right,” getting educated and developing skills, often taking on debt to do so. Those grads are now spending years looking for work, unable to find a path into a sustainable career. That experience, Akhvledziani Carew says, extends beyond those young people into demographics that financial advisors tend to serve.
The primary response to youth unemployment, she explains, is family support or additional debt. For families who may have wanted to retire, to invest more, or to pay down debts of their own, the burden of their unemployed children can take from the pool of assets advisors would otherwise serve.
There’s also the chance that a piece of positive news on the jobs front could prompt advisors and other industry stakeholders to overlook their client’s real and ongoing concerns about the changing nature of work.
“Canadians, do not read these reports. They live in their day to day experiences. And certainly what we see is people are worried,” Akhvledziani Carew says. “I would argue people are probably worried about job security. Aside from the economic pressure, but mostly because of also the advancements we see in the, in the air… Jobs that have historically been very secure, white collar jobs, are not looking as secure anymore.”
There is also ongoing concern about inflation. Akhvledziani Carew notes that if the recession is very shallow and only technical, and if unemployment continues to improve, then it’s likely that inflation will also stay somewhat elevated and the market expectation of a rate hike later this year may become a reality. On a consumer level, higher inflation and higher interest rates can put additional pressure on wallets, making it harder for clients to save and invest.
While not an advisor herself, Akhvledziani Carew cautions against a focus on macro news in advisor communications. Instead, she believes advisors need to meet clients where they are, find what they’re worried about and address those specific concerns in the best ways they can.
“The numbers are reassuring, that the economy is more resilient than I think a lot of people have anticipated amidst everything else that’s happening, which is positive. But the honest caveat is that, this number doesn’t really mean great news, in the broader context,” Akhvledziani Carew says. “It only partially offsets the job losses that we’ve accumulated since the start of the year. The youth unemployment is relatively high, and there’s a lot of uncertainty and there might be some rate increases if inflation stays strong. I would caution against being aggressive right now.”
