The Current - Worried about money? Our experts answer your questions

Episode Date: May 12, 2025

Are you worried about U.S. tariffs squeezing your retirement investments? Anxious about losing your job? Or afraid that inflation will make it harder to put food on the table? With economic uncertainty fuelling fears of recession, Matt Galloway puts your financial questions to economist Armine Yalnizyan and certified financial planner Shannon Lee Simmons.

Other People's Problems was the first podcast to take you inside real-life therapy sessions. I'm Dr. Hilary McBride, and again, we're doing something new. The ketamine really broke down a lot of my barriers. This work has this sort of immediate transformational effect. Therapy Using Psychedelics is the new frontier in mental health. Come along for the trip. Other People's Problems Season 5, available now. This is a CBC Podcast. Hello, I'm Matt Galloway and this is The Current Podcast. It is May, spring across this country, hopefully a lovely day wherever you happen to be today.

You would be forgiven if you just wanted to ignore any of the bad news out there. Bad news like Canada's new jobless numbers, which show US tariffs are taking a direct hit on Canada's economy. But today we are here to help. All this economic uncertainty has Canadians of all ages worried and wondering about the

future. And so last week we put out the call to you to send in your questions about the economy for our expert panel. This morning we have some answers. Armin Yalizyem is an economist, Atkinson Fellow on the future of workers and Shannon Lee Simmons is a certified financial planner and founder of the new School of Finance. Good morning to you both. Good morning. Good morning. Armin, we'll get to the questions in a moment, but I started with the unemployment rate went up to 6.9% in April.

What are the sectors that are losing jobs in this country? Mostly manufacturing and retail, the sectors that you would expect to be losing the most jobs. All of the bad news was kind of couched by the fact that we added a lot of people to deal with the federal election. So the pain was kind of masked. But it is a very bad news story and it is hitting exactly where you would think it would hit, where people make things and where people buy things.

Is this a nod from your perspective to how much damage this trade war is starting to do to our economy? I mean, we talk a lot about this, but it feels like the bite is being felt now. Yeah, we have been waiting for this. We knew that the uncertainty was causing people not to hire And not to expand particularly in the goods producing sectors But and we had heard anecdotally of layoffs, but this is the first scale of layoff

we're talking about tens of thousands of jobs lost in manufacturing and Something like 25,000 jobs lost in retail. So these are not small numbers of the jobs being lost and that will continue apace. Which leads to the anxiety that people are feeling, which leads to the questions that they have sent in to us. Shannon, I want to start with a question about the economy broadly. This is one about investments in some ways. It comes from Tess Watt.

We are recently retired couple in our mid sixties. Since Trump has been in power and Trudeau step down, we've lost the equivalent of a year's wages through our investments. It took us 40 years to save for retirement. Where do you see the markets going? How do we protect our life savings to ensure we don't continue to lose?

It's a bit of a horror movie when people look at where their investments are right now. Shannon, what do you say to Tess? Right. So it is a nerve-racking thing to have volatility in your investment portfolio, especially when you're in the period of drawdown versus building up, and particularly because it comes down to that time horizon. So what I would say, and this is a blanket sort of comment for everybody, is that money that you sort of need in the next one to two years is maybe money

that has too short of a time horizon to be invested in stock markets in the first place. So for example, if you were a young person buying a home, you wouldn't necessarily want your down payment money to be fully invested in the stock market because you might need that money in the next one to two years. And so I would offer the same for people who are retiring a portion of your portfolio, the sort of minimum payments from your riff, the payments that you know you need for your bills that you're going to be planning

to pull out of that portfolio to fund your life. Those have that money has an extraordinarily short time horizon, not the rest of the portfolio, but just that one to two years of planned withdrawals. And so that's the sort of money that if we can make sure that that's sort of maybe in a money market fund or a GIC or something, just the portion that you plan to take out in the next one to two years, then volatility like this can be a little bit less scary because it doesn't force you to withdraw money while things are at a loss

position and lock in those losses. You can ride the wave of volatility with the rest of the portfolio and you know that your sort of grocery money and your bills are secure for the next one to two years. And so I'd offer that as an option to people who might be thinking, what do I do to weather the storm? Make sure the money you need in the short run is safe and protected. And then the volatility is less scary at 3 a.m. I mean, it's interesting because we got a number of similar questions. And part of this is about, in that note, Tess said it took us 40 years to save for retirement.

You now have people who have no choice, but to cash in their investments. They can't afford to park that money anymore. Yeah, I remember this. I was working on Bay Street during the 2008, 2009 Great Recession, and I remember having very similar conversations and fears and anxiety, and that is accurate. So one of the reasons that even the RIF payment used to be 69 and got pushed out was because of that. We don't want people to have to cash in at a loss. So I would say in that case, if you're already fully invested

and you don't have this sort of one to two years sort of safety cushion in your portfolio that you could draw from in times of extreme volatility, then maybe doing something like dollar cost averaging when you're withdrawing that money. So that this volatility as the economy is so unpredictable right now, we don't know if it's going to go up, go down, depending on what the tariffs are.

We just had this rollback. We're not sure. So maybe spreading those withdrawals out over the course of a period of time instead of taking them on one day can help to take the sting out. Maybe there's things that go up over time, maybe less, but you're sort of hedging your bets with a dollar cost average versus today is the day I'm taking my entire riff payment or today is the day I'm making this massive withdrawal. So hopefully you can spread out the risk over a period of time. It is very, very scary. I'm not taking away from that at all in any way. And if there are places where you could reduce that spending, if you're

in control of how much is coming out of the portfolio and those positions are in a lost position, then maybe, you know, holding off till next year so you don't lock in that lot or holding off a little bit wherever you can, might be helpful for your own anxiety. Okay. I got a big bag of questions.

I'm going to keep rolling through them. We got, uh, out and about in the streets of Vancouver talking to people, um, their food prices were on people's minds. Have a listen to this. I don't know if I'm turning into my grandfather. Oftentimes I'll see prices of things and I'll say, oh my God.

Sometimes wonder if there should be caps that these companies, you know, profits are good, but they're being paid out to people, to investors, but then again, who, as an investor, I also want return. So it's, I think there should be something to manage that. I'm Sarah Trelevin and for over a year I've been working on one of the most complex stories I've ever covered. There was somebody out there who's faking pregnancies.

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It's a long story. Settle in. Available now. I mean, we have been in this extended affordability crisis and food prices continue to go up. Are they going to continue to go up, do you think? It depends on where you buy your food from and it depends on what happens to climate change and it depends on how much we manage to recreate in our own backyard. And just a quick nod to southwestern Ontario, which has the highest concentration of greenhouses

of anywhere in the world. So we are increasingly trying to be self-sufficient, but it is a cold country. So we will be importing our raspberries for January from other sunnier climes for a long time to come, but you don't have to import them from the United States. Of course, the further away they come from, the more they cost.

And to the point of, you know, should there be a cap on prices? Is something like that realistic? I mean, that was floated during the election by the NDP. Yeah, I mean, caps have been put on prices in other countries. Even European countries have created food baskets where there is a certain number of essential foods

whose prices cannot be raised in this period of emergency so that people don't go hungry because of huge volatility, as Shannon Lee has mentioned, which is in the cards for the future. I mean, when you take a look at what happened with the China-US deal in the last few hours, we have gone from over double tariffs from both sides to roughly around 10%. That is going to cause huge volatility in the stock markets. We've already seen what that has meant. Has been a surge in many stock market prices and in the indices, whereas we lost trillions

of dollars on April the 2nd and 3rd and 4th. This volatility ain't going away. And either is the volatility associated with climate change when it comes to fruit and veg, and perhaps what happens to the extent that we import meats and other things from the United States, their lack of FDA control now, food and drug administration control, means that there is going to be a lot more herd disease, there's going to be a lot more expensive things coming their way and consequently our way if we're not careful. So we do need to either ring fence what we are buying more effectively and find new supply

chains or make more of it ourselves. If you go beyond food, is your sense that inflation will continue to be, I mean, take a look at what happened in the wake of the pandemic and that was a driving factor in that cost of living crisis. Is inflation still going to be a growing concern for us here? It appears to be the case because when you have large, we're losing lots of smaller players because they cannot afford to keep going on after the pandemic, after the inflation spike,

after the interest rates spike, now the tariff wars, a lot of smaller players are falling. When you have markets that are more controlled by small numbers of players, you get more ability to set prices. You get what we called seller's inflation in the wake of the pandemic. So we are likely to see more prices rise because the fear is that prices are going to rise. So it creates a little bit of leniency in the market to see prices rise. That is a huge problem going forward and we do need to look at how we can cap inflation in certain things. Food is probably the hardest, but there are

other sectors that we can do better on. Like what? In housing, you can be putting on lots of ring fences. Basically, we are looking at housing prices fall in places like Toronto and Vancouver because of what is going on. There are private equity companies with very deep pockets of what's called dry powder cash ready to deploy. These large asset managers are looking to buy up residential and commercial and particularly multi-residential real estate properties.

Well, they're gonna buy them, they're gonna zhuzh them up a bit and then jack up the rental prices. That's exactly the opposite of what we need right now. We can't build fast enough. So you could be ring-fencing who can buy the properties that are going to inevitably come up for sale and also work with other sub you know, subnational jurisdictions

to put on some kind of rental caps. Otherwise, you're going to see a wave of people who are losing their jobs and losing their homes, looking for a place to live, and there is no place cheaper to live. I want to come back to the issue of real estate in a moment. This is this weird uncertainty and the volatility that people feel. I mean, if you have money, it can lead you to think, should I be spending that money or should I keep it aside and perhaps not buy something big?

Neil in Vancouver was wondering about big ticket items. Have a listen. Personally, like buying a new vehicle, getting a new vehicle, the things of like the economy and wanting to buy it like a clean energy vehicle, even an EV. And then you have even things like fueling those vehicles, getting to where you're going with those vehicles. And at the end of the day, even having a job to be able to get your vehicle moving, I guess. Shannon Lee-Simmons, what would you say to someone

like Neil who's considering buying a car right now? That's a big question, because we don't know exactly where things are gonna go, right? So I think the first thing when you're weighing the pros and cons of a big purchase, and when I say big purchase, I mean something that's like out of the realm of your normal everyday life,

maybe it's gonna go on debt, maybe it's gonna eat into your savings in a big way. That's what we're talking about. I would say that we don't have a crystal ball. We don't know exactly what's gonna happen economically, whether prices will fall on those items or skyrocket on any sort of large items, whether it's trips, travel, car, whatever.

So it really comes down to the microeconomics of your household. And you have to think inwardly about what can we sustain, not necessarily economically what's going to go on because we don't know exactly. And so number one, what's your income trajectory like? Are you in one of those industries that is experiencing layoffs, massive volatility? Our future income is our greatest asset. So I would start there on your ability to sustain and support your day-to-day household, even if you eat into your savings or you take on a new payment for something, things like

that. If that seems secure, as much as one can feel secure about their future income, it's not necessarily experiencing direct volatility right now. Then we go into stage two, which is affordability. How much of your after tax income on a monthly basis is gonna go to fund this thing? Whether it's replenishing savings or going to a new debt, what are you giving up in order to sustain that?

And is it actually sustainable as the price of food goes up, as the cost of living keeps driving up? Are you putting yourself in a financial situation where day-to-day life is going to become more and more difficult to support? And so you might be looking at taking on high interest rate credit card debt. If that feels okay, so income is good, there's a pocket in your after-tax income to support this, then I would say like, you know, if you need it, go for it. If you don't, and it's like, then you know, maybe you can hold off. But if it's something that you need to do or you want to do it, as long as your income is sustainable and you can support it, that's fine. But I really think it's a

microeconomic thing. I mean, do you worry that if people are pumping the brakes, I mean, that can have an impact on the larger economy, right? We're spending less money, therefore the people who rely on that money flowing through the economy are going to be hurt. That this uncertainty has a personal impact, but it goes beyond that. 100%. It's an uncertainty that clouds everybody's forward-looking decisions, particularly businesses, and that's where the job story comes in. If I was going to not be sure if I had enough business to come in, will I hire that part-timer to pick up what currently looks like too much volume for the existing staff?

Will that drive away some of the staff that are there because they're overworked? Everybody is in a pickle right now. We just don't know what the future is. When you are faced with this degree of uncertainty, the whole economy rushes forward from the business and from the household side to just stop and wait. And stopping is exactly what happened during the pandemic. That's why the economy plunged. That's why I have been saying for a number of weeks now, recessions are inevitable in

both countries, in the United States and in Canada, because take, for example, this supposedly historic deal between the United States and China that just got inked. Well, it's going to last for 90 days. What kind of a decision are you going to make in 90 days and not know what's happening on the other side of it? If you are doing business with China, nothing. You're going to stay put and see what happens. Shannon Lee Simmons, one of the things people are waiting to see what happens with is interest rates.

We were talking about real estate just briefly. We've had a number of questions from people. They have variable rate mortgages. There are close to a million mortgages that are up for renewal, I guess, this year in this country alone. They're wondering whether they should switch to a fixed rate mortgage. What is your sense of that? And what do you expect interest rates to do? That's interesting. I definitely think everyone would wanna get some custom advice from their mortgage expert on that while they're renewing,

because the timing of that is really interesting over the next one to two years. I think I would say if we come back to dealing with clients who I have been chatting with over the last few years, well, interest rates skyrocketed. The decision of fixed versus variable, I also think we need to remember what we can withstand emotionally on that and what's going to cause a lack of sleep. So if you are a person who during this last stint was in a variable and it caused so much deep anxiety and so much suffering from an emotional

or like anxiety place point of view. I don't think that that is something to weigh the pros and cons of simply just financially what I think is going to happen with interest rates, maybe a fix something can help you. If you're a person that went through this and you're like, hey, you know what? In the grand scheme, it worked out and variables really served me over the last 20 years of my mortgage, then that's a person that can maybe roll with more uncertainty. So I think that just like investing,

when it comes to trying to guess what interest rates are going to do, really think about what your own risk tolerance is on that and what your finances can handle. So stress testing your own mortgage, we've always done that. And then we had to do it to even get a mortgage, you had to stress test to make sure that you could do a higher layup. But now we've seen what could happen with very high interest rates. So really making sure that you're stress testing, like if

interest rates were to go up, how much cashflow could my household stand? As for where I think that it's going to go, I think we're just going to have to watch inflation, right? So I think we're going to go up with inflation as per usual monetary policy. And so, um, just keeping a really close eye on that. Two minutes left. I'm going to try and squeeze this question in, and I would like you both to answer it. It comes from Jeff in Calgary, understanding that these disruptions and the inconsistency

of the U S administration cause pain and anxiety for people who are directly and indirectly affected. The economy is a system and it will achieve a new equilibrium. Where are the opportunities and areas of growth where we should be investing, spending our time building resiliency and looking for work? Armin, in the carnage, where do you see, as we say, potential areas for growth in this country? I see two basic areas, building up our own self-sufficiency, particularly in the area of energy

in the eastern part of the country. And secondarily, looking at non-market solutions to affordability crises. So doing exactly what this federal government was hired to do is to rebuild supply chains, get going on building more affordable housing, and also advance what we are doing in terms of dental care and pharma care, removing these items, at least the basics of these items, from market control.

Because that is the new equilibrium. It's going to be, for all of my career as an economist and as a student, the mantra was more market, less government. We are firmly in a more government, less market moment. Shannon Lee-Simmons, the last 30 seconds to you. Is there an area that you think people should look at as not talking about, you know, green grass in the midst of a burnt field, but do you know what I mean? Something that's going to give people an idea as to where we might go. I think, again, a lot of this comes down to what's in your control and what's not.

And so being on the personal finance front, which is where I live, what can you control on your personal finance front so that you are best sort of protected against uncertainty volatility? I would say one thing that's been really great is diversifying income streams. So you're less panicked when things happen in the greater economy that are out of your control. So if you can have a diversified revenue stream or you have backup levels of income,

I think that that's something to start thinking about in a real way, even if it's something on the side for now, unfortunately, because I know we're all so busy. And I would bring it back home to a very unexciting emergency account. I think that they go a long way of a blanket of calm and a moment of volatility. People have questions. You had answers. I'm delighted to be able to connect the two. Thank you both for being here. Thank you. Thank you. Arminia Nizzi,

an economist, Atkinson Fellow on the future of workers. Shannon Lee Simmons is a certified financial planner and the founder of the New School of Finance. You've been listening to The Current Podcast. My name is Matt Galloway. Thanks for listening. I'll talk to you soon. School of Finance.