Canadians’ nine-year recession
Almost all the media coverage of Statistics Canada’s recent economic report heralded the fact that Canada avoided a recession in the fourth quarter of 2023. The economy had shrunk by 0.3 per cent in the third quarter, so another decline at the end of the year would have meant a recession according to the technical definition of two consecutive negative quarters. In reality, however, individual Canadians remain mired in a prolonged and worrying recession.
Why is there a difference between Canadians being in a recession and their country avoiding it?
Recessions measure the economy as a whole without regard for how it affects individuals. But consider an economy growing at two per cent while its population is growing at four per cent.
On a per person basis, the amount of goods and services produced in the economy (i.e., GDP) actually declines.
Which is exactly what’s happening in Canada. According to Statistics Canada, the country’s population grew more in the third quarter of 2023 than at any time since 1957. Even more telling, growth in just the first nine months of 2023 was more than in any full year since Confederation.
This combination of a slowly growing national economy and surging population has meant that per-person GDP has declined — from $60,178 in the second quarter of 2022 (when it peaked POST-COVID) to $58,111 in the fourth quarter of 2023. That’s a decline of $2,066 or 3.4 per cent. (All dollars are inflation-adjusted.)
That represents a marked decline in Canadian living standards in a relatively short period. Five of the six quarters since per-person GDP peaked in Q2:2022 have recorded declines and the one positive quarter (Q1:2023) registered only a 0.1-per cent increase. Simply put, Canadians are enduring a period of real decline in per-person GDP.
This decrease has erased all gains made since 2014. At the end of 2014, nine years ago, per-person GDP (again, inflation-adjusted) was $58,162, which is $51 more than at the end of 2023. Canadian living standards are now lower than they were at the end of 2014.
The decline is expected to continue. According to long-term forecasts from the OECD three years ago, Canada will record the lowest growth rates in per-person GDP of any industrialized country. Countries as diverse as New Zealand, Italy, Korea, Turkey and Estonia are all expected to leapfrog us to higher living standards.
Given our enormous economic potential, this prospect should be unacceptable to all Canadians, regardless of their political or ideological leaning. And yet policymakers are essentially ignoring a prolonged decline in per-person GDP and living standards that will continue to hurt Canadians and their families until real reforms are enacted.
COUNTRIES AS DIVERSE AS NEW ZEALAND, ITALY, KOREA, TURKEY AND ESTONIA ARE ALL EXPECTED TO LEAPFROG US.