From the Fraser Institute

By Jock Finlayson

Approximately three years have passed since the end of the initial phase of the COVID pandemic that saw large swathes of the economy shuttered for most of the 2020-2021 period. And it’s almost nine years since the 2015 federal election, which resulted in a majority government for Justin Trudeau’s Liberals. So, it’s a good time to do a pulse check on Canadians to see how they’re faring and feeling about the country.

Overall, the news isn’t particularly cheerful, on either front.

Dealing first with economic prosperity, the big story is that Canada’s population has been growing faster than the volume of output produced by the economy (defined as gross domestic product, adjusted for inflation). This means the economy has been shrinking on a per-person basis, prompting some analysts to coin the term “per-person recession” to describe the performance of Canada’s economy since 2022.

The trend has been stark in the last two years, but it started earlier. The absolute level of per-person output is smaller today than in 2018 in seven of 10 provinces including Ontario. More importantly, income and earnings growth has been essentially stagnant for most Canadians over roughly the last decade. Canada has also fallen further behind the best-performing advanced economies on productivity, per-person income and real wages.

What about public attitudes? A recent Ipsos survey finds 70 per cent of Canadians think the country is “broken,” an opinion especially common among young adults. Older Canadians have a more positive view of things. A Statistics Canada survey shows a significant drop in the percentage of Canadians reporting high levels of “life satisfaction.” The same survey shows that 40 per cent of respondents between the ages of 25 and 54 say it’s difficult to meet their financial needs.

The shock delivered by the recent bout of high inflation no doubt has contributed to this gloomy assessment. And it doesn’t help the public mood that housing has never been less affordable, that crime is on the rise, and that basic health-care services are harder to access than they were five or 10 years ago.

Other data paint a more nuanced picture of how Canada is doing. The Organization for Economic Cooperation and Development (OECD)—a collection of mostly rich countries—publishes a “Better Life Index,” which aims to gauge overall citizen wellbeing.  In the most recent iteration of the Index, Canada beats the OECD average on income, employment levels, education attainment, life expectancy at birth, and environmental quality, among other indicators. Our relative ranking has slipped in some areas—a worrisome sign—but overall, Canada puts up a decent score.

Still, stagnant real incomes and an economy that’s expanding more slowly than the population is not an ideal place to land. To do better, Canada will need at least a few years of stronger per-person economic growth. This will require a turnaround in our notably lacklustre productivity record and a sustained pick-up in business investment. Revisiting the federal government’s ambitious immigration targets may also be necessary, as Trudeau government ministers have publicly (albeit somewhat sheepishly) acknowledged.

Getting the economic fundamentals right is essential to making progress on most economic and social indicators. As the OECD notes, “while money may not buy happiness, it is an important means to achieving higher living standards and thus greater well-being.”