Rising interest rates would make millennials and younger Generation X individuals more vulnerable to losing their jobs should the economy experience a dramatic slowdown in the coming months.

In the analysis issued on Wednesday, RBC economist Carrie Freestone stated that debt loads are particularly burdensome for core-age working adults than they were 20 years ago. Compared to the same age group in 1999, older millennials, defined as those aged 35 to 44, had debt-to-disposable income ratios over 250 percent in 2019.

The staggeringly high household debt of the millennial age has in many ways come to define it, according to Freestone. With low-interest rates during the early months of the COVID-19 pandemic letting many young first-time buyers enter the hot home market and burdening owners with mortgages, many Canadians’ financial situations have only become worse since 2019.

The Bank of Canada’s policy rate has increased 4.75 percentage points from the pandemic-era lows, and while not all millennials own homes, those who do are particularly susceptible to the increasing interest rate environment. Based on current rates for a normal five-year term, RBC anticipates that the average Canadian refinancing their mortgage might experience a 25% increase in monthly payments by early 2024.

The issue, according to Freestone, is that salaries haven’t increased quickly enough to counteract the impending mortgage shock. Since the pandemic began, the average hourly wage has increased by 12%, less than half the anticipated increase in mortgage payments.

The outcome? RBC predicts a significant decline in spending in this middle-aged population this fall, especially if millennial and younger Gen X employees experience job losses. Despite record rate rises, Freestone argued that “growth is still holding up,” but that “higher unemployment rates may trigger an entirely different outcome for demand in the year ahead.”

Many analysts predict that this fall, when the lingering effects of higher interest rates start to bite, Canada’s economy will weaken and the number of job losses will increase. In a research made public on Tuesday, CIBC predicted that by early 2024, the unemployment rate will rise to almost 6.0 percent, up from 5.5 percent in July. Over the summer, the unemployment rate has been gradually increasing. According to CIBC, if unemployment increases as predicted, the Bank of Canada may even decide to start lowering interest rates as early as the first quarter of 2024.