On January 28, Moody’s Investors Service, a credit rating agency, “downgraded the long-time ratings of six Canadian banks.” The agency cites “concerns that Canadian banks’ exposure to the increasingly indebted Canadian consumer and elevated housing prices leaves them more vulnerable to unpredictable downside risks facing the Canadian economy than in the past,” said David Beattie, a Moody’s executive. The downgrade sheds light on the long-term financial outlook for many post-secondary students. As students remain in school longer, their student debt will continue to rise. The credit downgrade of Canadian banks is a reflection of the broader outlook of the Canadian economy.


Although Canadian banks remain the soundest in the world — Moody’s ratings of Canadian banks remain the highest globally — the downgrade reflects Canada’s slow economic growth. In a nutshell, many economic factors are at play that are not readily apparent in day-to-day life. According to Jeff Rubin, author of The End of Growth, “Moody’s downgrade reflects broadly the slowing of the Canadian economy, which is not growing like it used to.” According to Rubin, the triple-digit price of Brent Crude oil, the world oil benchmark, is causing slow growth. When the country’s major source of energy is trading at such levels, it hinders sustainable economic recovery.

In essence, slow growth leads to a weak job market, especially for the entry-level jobs many students and recent graduates will be seeking. Economics may not be the most interesting topic to many students, but, these economic woes have a direct impact on today’s youth. The slow growth is contributing to the increase the joblessness among those aged 15-24.

It is no surprise that when the youth unemployment rate rises, students stay in school longer, creating a Catch-22 for many students: remaining in school longer because so few jobs are available, resulting in increased debt and contributing to the credit downgrade of Canadian banks. It is here that the downgrade of Canadian banks hits home for students. The opportunity cost — the cost of an alternative that must be forgone in order to pursue a certain action — of pursing one’s education is high. Furthermore, staying with one’s parents seems to be an attractive alternative to moving out, resulting in many parents remaining in the workforce longer, contributing to the graying of the labour force, with many individuals working past retirement age.

Despite the slow Canadian economy, new opportunities are emerging. In today’s world of triple-digit oil prices, the cost of transporting goods around the world is soaring. In short, we could see a return of jobs to Canadian shores.

The shift in the Canada’s economy requires a new perspective. There are growth opportunities, but they are unlike double-digit oil prices of the past. Rubin believes that going forward, “it will be a local economy, not a global economy with a specialized niche. We will reconnect to our local market, since distance costs money we’ll see a return of manufacturing jobs come back to Canada. With today’s youth staying in school longer over tim, it will result in a better-educated labour force.” While the future for many students is uncertain, the change in the economy opens up a new set of doors for students and recent graduates to explore new skills and experiences. The training received during one’s post-secondary career provides them with a strong competitive advantage in today’s economy.

Dwayne G. White earned his BA in Political Science from U of T in 2012. He  is currently a student member of the Canadian Population Society and is working on a paper exploring social mobility in large firms. 


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