By Dylan Marks and Anthony Lippa-Hardy
With a recent rise in unemployment and markets such as the Toronto Stock Exchange (TSX) seeing a six-month low, the Canadian economy is expecting to face a “shallow recession” later in the year, according to TD’s long-term economic forecast.
The forecast stated that Canada’s economic growth is projected to remain below-trend through 2025 and 2026 due to slower population growth and the dampening effects of tariffs.
The tariffs imposed by United States (U.S.) President Donald Trump have led to BNN Bloomberg and J.P. Morgan increasing their predicted probability of an upcoming recession between 40 and 50 per cent.
Taylor Wright, assistant professor of economics at Brock University, said that a recession is the general weakening of an economy.
“We can think of the economy as expanding and contracting. Expanding, the economy is growing. Contracting, the economy is shrinking,” Wright explained. “Just like we have normal breathing cycles, we have normal business cycles in economics. A recession is a period of the economy contracting.”
Wright said one sign of being in a recession is having back-to-back quarters of the economy shrinking or negative gross domestic product (GDP) growth.
However, this figure currently makes it difficult to assess the state of Canada’s economic future as the country’s first quarter results for GDP will be released by the Bank of Canada on April 30, resulting in many economists forecasting the recession taking place later in the year.
Similar to GDP, Canada’s market volatility index (S&P/TSX 60 VIX Index) can also be a sign of economic downturn, having risen roughly 8.2 percentage points since the beginning of the year, indicating increased risk and investor fear in Canadian markets.
An upcoming recession could mean more than just tanking investment portfolios for students. According to Bryan Evans, professor at the Department of Politics and Public Administration at Toronto Metropolitan University (TMU), the negative economic repercussions would have a large effect on employed students that rely on part-time income to fund their education.
“When the economy tanks, youth employment is always the worst hit. Unemployment goes up, employment goes down and young people typically bear the brunt of it,” said Evans.
In the March 2025 labour force survey released by Statistics Canada, it was announced that employment fell by 33,000—the first major decrease since January 2022.
According to the survey, “there were 1.5 million unemployed people in March, up 36,000 (+2.5%) in the month and up 167,000 (+12.4%) on a year-over-year basis.”
“Will I find a job in the industry I want to be in?”
Evans also stated if this trend persists, unemployment would continue to increase significantly. This could leave students without jobs, and in turn, unable to afford their education and basic necessities.
Youth employment is very vulnerable during recessions and can make a heavy impact on those entering the labour force for the first time, according to Wright. He also stated that no matter how high general unemployment rates are, youth unemployment tends to be higher.
“In general, youth unemployment is roughly twice as high as the general unemployment rate. So if the general unemployment rate is six per cent, the youth unemployment rate is, roughly speaking, 12 per cent,” he explained.
Adyan Owusu, a fourth-year engineering student, said that his income from his part-time job at JD Sports in Brampton, Ont. is crucial for funding his education and other necessities.
“I’d say I rely on my job a lot because I also buy things for my house, or if I’m paying off something like my car…where else am I going to get the funds from?” he said.
He also mentioned his income helps him pay for transportation, food and other essential living expenses.
According to the February labour force survey, “the youth unemployment rate had previously touched a 12-year high of 14.2% in August and December 2024, following a strong upward trend throughout most of 2023 and 2024.”
Along with difficulties finding work, Canada’s inflation rate has already seen increases from 1.9 per cent to 2.9 per cent from January to February, according to Statistics Canada.
TD also predicts a long-term inflationary increase as “Canadian inflation is expected to run a bit hotter than in our last forecast due to retaliatory tariffs and a weaker loonie.”
With higher prices and less jobs for Canadians, Wright explained that talking about a recession as a contraction of the economy leads to “belt tightening” and cutting back on spending of certain luxuries.
“There may be a shift away from more expensive brands of goods to cheaper store-based alternatives,” said Wright. “People are going to be trying to do more with less. And so they’re going to be cutting back on their spending in a bunch of different ways.”
Owusu said with his minimum wage income, it is hard for him to afford necessities because of how much inflation affects everyday items.
“When I’m going out to buy some groceries and stuff, I’m like, ‘holy crap, I’m not even getting paid this much.’ And for me, affording groceries is hard and I think to myself ‘inflation just sucks’ and minimum wage is not matching up either.”
Rebecca Grabinsky, a fourth-year fashion student, fears inflation might not only affect her cost of living but her income as well. To her, heavy consumer spending from customers is equally important as getting consistent shifts at work.
“I think [a recession] would mostly impact me on the amount of business we’re getting. Not so much less shifts or hours for me, but just the amount of people coming in and actually spending money… which means tipping less, which means less money for me,” she said.
Grabinsky, a full-time employee at Grace O’Malley’s, said she already struggles with saving and budgeting, but a noticeable drop in hours or tip-outs would push her to start prioritizing her finances.
Wright added that youth who enter the job market for the first time during a recession tend to see lasting effects on their lifetime income. They also tend to see most of their wage increase in approximately the first 10 years that they are in the labour market which, in a recession, results in competition between many different people and less increases.
“These are real consequences for real people’s lives that we’re talking about here”
“That usually means that your wages are going to be lower and you’re going to be accepting worse jobs or at least worse compensation for those jobs than you would if there were fewer people you were competing with,” said Wright.
Grabinsky is also concerned about her ability to find stable employment in her field, where there are already fewer job prospects, causing her to look at alternative career plans to fund her future.
“Will I find a job in the industry I want to be in? Or do I have to work something else but also work a job [in my desired field] to get my foot in the door?” she said.
Looking to the future, more people are likely to claim unemployment insurance, Wright said. He added this could compound with rising prices from recent tariffs and the ongoing cost-of-living crisis to create a much larger issue at hand for Canadians.
“What that might mean is more reliance on things like food banks, which are already stretched pretty thin. So these are real consequences for real people’s lives that we’re talking about here,” he said.
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