Economy
Canadians experiencing second-longest and third steepest decline in living standards in last 40 years
![](https://www.todayville.com/edmonton/wp-content/uploads/sites/2/2024/01/tvrd-lifesite-canadians-finance-economy-inflation-cost-of-living-image-2024-01-04.jpg)
From the Fraser Institute
From 2019 to 2023, Canadian living standards declined—and as of the end of 2023, the decline had not yet ended, finds a new study published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“Despite claims to the contrary, living standards are declining in Canada,” said Grady Munro, policy analyst at the Fraser Institute and co-author of Changes in Per-Person GDP (Income): 1985 to 2023.
Specifically, from April 2019 to the end of 2023, inflation-adjusted per-person GDP, a broad measure of living standards, declined from $59,905 to $58,111 or by 3.0 per cent. This decline is exceeded only by the decline in 1989 to 1992 (-5.3 per cent) and 2008 to 2009 (-5.2 per cent). In other words, it’s the third-steepest decline in 40 years.
Moreover, the latest decline (which comprises 18 fiscal quarters) is already the second-longest in the last 40 years, surpassed only by the decline from 1989 to 1994 (which lasted 21 quarters). And if not stabilized in 2024, this decline could be the steepest and longest in four decades.
“The severity of the decline in living standards should be a wake-up call for policymakers across Canada to immediately enact fundamental policy reforms to help spur economic growth and productivity,” said Jason Clemens, study co-author and executive vice-president at the Fraser Institute.
- Real GDP per person is a broad measure of incomes (and consequently living standards). This paper analyzes changes in quarterly per-person GDP, adjusted for inflation from 1985 through to the end of 2023, the most recent data available at the time of writing.
- The study assesses the length (number of quarters) as well the percentage decline and the length of time required to recover the income lost during the decline.
- Over the period covered (1985 to 2023), Canada experienced nine periods of decline and recovery in real GDP per person.
- Of those nine periods, three (Q2 1989 to Q3 1994, Q3 2008 to Q4 2011, and Q2 2019 to Q2 2022) were most severe when comparing the length and depth of the declines along with number of quarters required for real GDP per person to recover.
- The experience following Q2 2019 is unlike any decline and recovery since 1985 because, though per person GDP recovered for one quarter in Q2 2022, it immediately began declining again and by Q4 2023 remains below the level in Q2 2019.
- This lack of meaningful recovery suggests that since mid-2019, Canada has experienced one of the longest and deepest declines in real GDP per person since 1985, exceeded only by the decline and recovery from Q2 1989 to Q3 1994.
- If per-capita GDP does not recover in 2024, this period may be the longest and largest decline in per-person GDP over the last four decades.
Read the Full Report
Authors:
Economy
Historic decline in Canadian living standards officially reaches five-year mark
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From the Fraser Institute
By Jake Fuss and Grady Munro
Indeed, according to a recent study, from the middle of 2019 to the end of 2023, GDP per person fell from $59,905 to $58,134—a 3.0 per cent drop over four and a half years.
On Friday, Statistics Canada released its estimate of gross domestic product (GDP) for the second quarter of 2024, which confirmed that despite growth in the overall economy, individual living standards for Canadians declined once again. As a result, the ongoing decline in Canadian living standards has officially reached the five-year mark.
GDP—the final value of all goods and services produced in the economy and the most widely used measure of overall economic activity—grew by 0.5 per cent from April to June of 2024 (after adjusting for inflation). But while the economy continues to grow in the aggregate, inflation-adjusted GDP per person—a broad measure of individual living standards that adjusts for population—actually fell by 0.1 per cent during the second quarter of 2024, down to $58,005.
In other words, while the overall economy is growing, individual living standards are falling. This apparent disconnect is due to Canada’s growing population, and the fact that the rate of economic growth is not fast enough to account for the amount the population has increased. Specifically, while the economy grew by 0.5 per cent from April to June of 2024, the total population grew by 0.6 per cent (or 242,673 people).
These data confirm that Canadians are still suffering a historic decline in living standards.
Indeed, according to a recent study, from the middle of 2019 to the end of 2023, GDP per person fell from $59,905 to $58,134—a 3.0 per cent drop over four and a half years. This was the second-longest and third-deepest decline in living standards since 1985, and was only exceeded in both respects by a decline that lasted more than five years (from June 1989 to September 1994).
Unfortunately for Canadians, this recent decline in living standards persisted through the first three months of 2024, and now the newest data show the decline has continued into the second quarter of 2024. Therefore, as of June 2024, inflation-adjusted GDP per person stood 3.2 per cent below the level it was in the middle of 2019. Again, despite a few brief quarters of positive per-person economic growth since 2019, the general decline in inflation-adjusted GDP has officially reached the five-year mark.
Due to the continued persistence of weak economic growth combined with remarkable population increases, Canadians have suffered a marked and prolonged decrease in living standards over the last five years. This puts Canada just six months away from experiencing the longest decline in individual living standards of the last 40 years—a milestone no one should be eager to reach.
Authors:
Economy
British Columbia’s finances go from bad to worse during Eby’s first full year
![](https://www.todayville.com/edmonton/wp-content/uploads/sites/2/2024/08/tvrd-fi-bc-premier-david-eby-image-2024-08-30.jpg)
From the Fraser Institute
By Tegan Hill and Grady Munro
You might be able to justify higher spending if it improved programs and services for British Columbians—but it hasn’t. In fact, despite substantial increases in spending in recent years, the province’s health-care wait times have increased and student test scores have declined.
The recent move by BC United to suspend its campaign, essentially clearing the way for a two-party race in this fall’s provincial election, made headlines across British Columbia. But another recent event, which failed to garner much media attention, included some jaw-dropping numbers that will impact provincial finances for years to come.
Last week, the Eby government recently released its year-end report for the 2023/24 fiscal year—this government’s first full year in office. Unfortunately for British Columbians, provincial finances went from bad to worse as the government ran a larger-than-projected budget deficit and accumulated significant debt.
First, let’s take a closer look at the government’s budget—David Eby’s first official budget as premier—which projected a $4.2 billion operating deficit for the 2023/24 fiscal year (the government expected to spend $81.2 billion while only bringing in $77.7 billion in total revenues). For context, in its last budget the Horgan government had also planned to run a $4.2 billion deficit in 2023/24, but expected to take in $7.5 billion less in revenues. Put differently, the Eby government could have ran a budget surplus if it stuck to Horgan’s spending plan. Instead, the Eby government chose to spend away that $7.5 billion.
Given that per-person (inflation-adjusted) program spending was already at its highest level since 1965 (the earliest year of available data) under the Horgan government in 2021 (even excluding COVID-related spending), that’s a massive influx of new spending.
Now, the year-end report shows that the Eby government increased spending even further—$3.5 billion more than its original plan in the 2023 budget. Overall, it ran a $5.0 billion operating deficit in 2023/24, despite once again taking in more revenues ($1.9 billion) than it had originally planned. Again, the government chose to spend away every single dollar of extra revenue, and then some.
And the eye-popping deficit is only part of the picture as longer-term spending on things such as schools, highways and bridges, isn’t included. After accounting for long-term spending on capital projects, the B.C. government accumulated $11.3 billion in net debt (total debt minus financial assets) in a single year from 2022/23 to 2023/24. Government debt must ultimately be financed by taxpayers who spent $3.3 billion in debt interest payments in 2023/24. That’s money no longer available for programs such as health care or education.
According to the Eby government, “with a slower world economy and a growing population, we cannot afford to have a deficit of services. When we provide the services and support people need to have a good life, it makes our economy stronger and more resilient.”
You might be able to justify higher spending if it improved programs and services for British Columbians—but it hasn’t. In fact, despite substantial increases in spending in recent years, the province’s health-care wait times have increased and student test scores have declined. Put differently, according to key indicators, B.C.’s performance on health care and education—the two largest areas of government spending—have worsened despite higher spending.
Higher spending also hasn’t paid off for the B.C. economy, which is stagnating. The province’s per-person GDP, a broad measure of living standards, is expected to be lower this year than in 2018. And the Eby government expects negative growth in per-person GDP this fiscal year.
Unfortunately for British Columbians, the latest year-end report on B.C.’s finances shows the Eby government took a bad fiscal situation and made it worse with higher spending and an even larger budget deficit. The next government, whoever that may be, must deal will this fiscal mess.
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