GOLDSTEIN: New Statistics Canada data reveals standard of living on downward spiral

Yahoo

01-03-2025

Buried because of the news about the Trump, Vance, Zelenskyy confrontation at the White House on Friday was the release of new economic data by Statistics Canada showing our standard of living has further deteriorated over the past two years.
StatsCan reported that Canada's real GDP per capita, which measures economic output per person, adjusted for inflation, a widely accepted metric for measuring a nation's prosperity, fell by 1.4% in 2024, following a decline of 1.3% in 2023.
This is part of a longstanding crisis in the Canadian economy that has accelerated under the Trudeau Liberals.
It is unsurprising given outgoing Prime Minister Justin Trudeau's focus on redistributing income as opposed to growing the economy during his decade in office.
Everyone from Bank of Canada Senior Deputy Governor Carolyn Rogers, who has called it a 'break the glass' emergency, to Liberal leadership contender Chrystia Freeland, who called it the 'Achilles heel' of the Canadian economy when she was finance minister, has sounded the alarm.
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The root problem is the low productivity of Canada's economy, which Freeland said in her 2022 budget speech, 'matters because (productivity) is what guarantees the dream of every parent – that our children will be more prosperous than we are' – a dream dying in Canada today.
Low productivity doesn't mean Canadian workers are lazy but rather that they are not being given access to the latest economic tools and technological advancements to work more efficiently because of a lack of business investment in Canada.
This is particularly alarming because of how far Canada has fallen economically behind the U.S. – our largest trading partner – just as we're about to enter a tariff war provoked by President Donald Trump, which will further damage our economy.
Jake Fuss, director of fiscal studies for the Fraser Institute writing in The Hub last year, noted that real GDP per capita in Canada during the Trudeau years rose by 1.9%. In the U.S,. during the same period, it increased by 14.7%.
University of Calgary economist Trevor Tombe, also writing in The Hub last year, said that, 'if Canada had simply kept pace with the U.S. over the past two years our economy would be 8.5% larger – that's about $6,200 more income per Canadian each year.'
He estimated that in 2024, the total gap in real GDP per capita between Canada and the U.S. was about $22,000 – $66,300 in the U.S. compared to $44,400 in Canada, in 2015 dollars.
In 2024 dollars, he said, the gap was higher – roughly $28,000.
'Put another way', Tombe wrote, 'real GDP per capita in the U.S. was 43% higher than in Canada in 2023. And in 2024, I estimate this gap will widen to nearly 50%.
'Let that sink in for a moment. The U.S. is on track to produce nearly 50% more per person than Canada will. This stunning divergence is unprecedented in modern history.'
Freeland warned in her 2022 budget that unless this trend is reversed, 'the Organization for Economic Co-operation and Development projects that Canada will have the lowest per-capita GDP growth rate among its member countries' from 2020 to 2060.
That includes in the G7 to which Canada belongs – along with the U.S., U.K, Germany, France, Italy and Japan.
Liberal apologists will try to camouflage this fiscal emergency by pointing out Canada's real GDP increased by 2.6% on an annualized basis in the fourth quarter of 2024, higher than expected.
But that was largely because of the dramatic increase in immigration, which the Liberal government authorized, ignoring advance warnings from its own public servants that doing so would increase the cost of living and put added strain on already beleaguered public services such as heath care.
Bringing in more people means there is more economic activity, but if it's not matched by economic growth it's bad for everyone – both Canadian citizens and immigrants – which is exactly what happened.
Even Trudeau admitted – too late – that his government brought in too many people too quickly and is now belatedly trying to address the crisis by somewhat reducing immigration targets.
Trudeau also knew about this crisis when he won the 2015 election, as the Fraser Institute's senior fellow Ben Eisen noted in The Hill Times in January, criticizing then-prime minister Stephen Harper for 'having the worst record of economic growth since R.B. Bennett in the depths of the Great Depression.'
During the Harper era, real GDP per capita grew at 0.5% annually. Under Trudeau it's been 0.3%.
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