Economic Pressures Push Young Canadians into Debt and Back Home

• Young Canadians are facing rising debt levels, with credit card balances at their highest since 2007
• Missed payments are increasing, particularly among those aged 26-35
• Delinquency rates for auto loans are hitting new highs
• Economic pressures are driving more young adults to live with their parents or grandparents

Driving the News: Young Canadians are increasingly struggling to manage their finances. According to Equifax Canada's latest report, consumer debt rose to $2.5 trillion in Q2 2024, a 4.2% increase from the previous year. Credit card debt, in particular, has spiked, with outstanding balances reaching $122 billion—up nearly 14% from Q2 2023. The average credit card balance per consumer has climbed to over $4,300, the highest since 2007.

Why It Matters: The rising debt levels and missed payments are red flags that could signal deeper economic troubles ahead. Young adults, especially those under 35, are facing the fastest decline in their ability to manage debt payments. As inflation begins to stabilize, rising unemployment is intensifying financial pressures, creating a major challenge for young Canadians and potentially affecting the broader economy.

Multigenerational Living on the Rise: Economic pressures are also reshaping Canadian households. Nearly one in three households now includes adult children living at home, a significant increase from a decade ago. This trend is particularly strong in Ontario, where 32.8% of households are multigenerational. This shift may have long-term implications for the housing market and family dynamics in Canada.

Industry Insight: "This is problematic for productivity and the Canadian economy overall," said Robert Barnard, founder of Toboggan Flats, which is repurposing vacant office to space to create co-living for young workers. "Young workers are the most educated workforce and earn less due to there lower work experience. If they launch their independent years well, young workers drive the economy forward for years to come. If they stall, its hard for them to catch up. Housing is proving to be one of the biggest impediments to this young generation's ability to launch well. Its keeping them out of offices and away from education and contributing to the deterioration of downtowns."

The Bottom Line: Young Canadians are facing a perfect storm of financial challenges: rising debt, increasing delinquencies, and fewer opportunities in the job market. As these pressures mount, more young adults are moving back home, and the risk of defaulting on loans—especially auto loans—is growing. This situation calls for urgent attention to ensure that young Canadians are not left behind in the economic recovery.