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Historic decline in Canadian living standards continues into 2024

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3 minute read

From the Fraser Institute

By Grady Munro and Jake Fuss

Statistics Canada on Friday released its estimate of gross domestic product (GDP) for the first quarter of 2024, and once again while the Canadian economy is technically growing, the living standards of Canadians themselves are continuing to fall.

The new numbers reveal that inflation-adjusted 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 0.4 per cent in the first quarter of 2024. But at the same time, inflation-adjusted GDP per person—a broad measure of individual living standards—actually fell 0.2 per cent during the first quarter of 2024, down to $58,028.

This apparent disconnect between overall economic growth and individual living standards is the result of Canada’s changing population. The reason the economy is growing while living standards are falling is because the rate of economic growth is not fast enough to account for all the new people in Canada (whether through birth or immigration). During the first three months of 2024, the economy grew by 0.4 per cent while the population grew by 0.6 per cent.

A single quarter of declining per-person GDP is not particularly concerning in and of itself, but unfortunately for Canadians, these new data are simply the latest evidence of a prolonged decline in individual living standards.

A recent study measured inflation-adjusted per-person GDP over the last 40 years (1985 to 2023) and found that from the middle of 2019 (well before COVID) to the end of 2023, per-person GDP fell from $59,905 to $58,134. This 3.0 per cent drop over four and a half years was the second-longest and third-deepest decline in living standards over the entire period—only exceeded in both length and depth by the more than five-year decline that began mid-1989 and lasted until living standards recovered in the third quarter of 1994, and which saw inflation-adjusted GDP per person fall by 5.3 per cent.

If we factor in the new data for the beginning of 2024, we see that the current ongoing decline is worsening. Inflation-adjusted per-person GDP now sits 3.1 per cent below the level it was in mid-2019, and the decline is approaching five-years in length. In other words, Canada is approaching the milestone of experiencing the longest decline in individual living standards of the last 40 years.

Weak economic growth combined with a fast-growing population over the last several years have resulted in Canadians experiencing a marked and prolonged decrease in living standards. With new data showing no sign of improvement, Canadians and governments across the country should realize that the status quo cannot continue.

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Business

Canada may escape the worst as Trump declares America’s economic independence with Liberation Day tariffs

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MXM logo  MxM News

Quick Hit:

On Wednesday, President Trump declared a national emergency to implement a sweeping 10% baseline tariff on all imported goods, calling it a “Declaration of Economic Independence.” Trump said the tariffs would revitalize the domestic economy, declaring that, “April 2, 2025, will forever be remembered as the day American industry was reborn.”

Key Details:

  • The baseline 10% tariff will take effect Saturday, while targeted “reciprocal” tariffs—20% on the EU, 24% on Japan, and 17% on Israel—begin April 9th. Trump also imposed 25% tariffs on most Canadian and Mexican goods, as well as on all foreign-made cars and auto parts, effective early Thursday.

  • Trump justified the policy by citing foreign trade restrictions and long-standing deficits. He pointed to policies in Australia, the EU, Japan, and South Korea as examples of protectionist barriers that unfairly harm American workers and industries.

  • The White House estimates the 10% tariff could generate $200 billion in revenue over the next decade. Officials say the added funds would help reduce the federal deficit while giving the U.S. stronger leverage in negotiations with countries running large trade surpluses.

Diving Deeper:

President Trump on Wednesday unveiled a broad new tariff policy affecting every imported product into the United States, marking what he described as the beginning of a new economic era. Declaring a national emergency from the White House Rose Garden, the president announced a new 10% baseline tariff on all imports, alongside steeper country-specific tariffs targeting longstanding trade imbalances.

“This is our Declaration of Economic Independence,” Trump said. “Factories will come roaring back into our country — and you see it happening already.”

The tariffs, which take effect Saturday, represent a substantial increase from the pre-Trump average U.S. tariff rate and are part of what the administration is calling “Liberation Day” for American industry. Reciprocal tariffs kick in April 9th, with the administration detailing specific rates—20% for the European Union, 24% for Japan, and 17% for Israel—based on calculations tied to bilateral trade deficits.

“From 1789 to 1913, we were a tariff-backed nation,” Trump said. “The United States was proportionately the wealthiest it has ever been.” He criticized the establishment of the income tax in 1913 and blamed the 1929 economic collapse on a departure from tariff-based policies.

To underscore the move’s long-anticipated nature, Trump noted he had been warning about unfair trade for decades. “If you look at my old speeches, where I was young and very handsome… I’d be talking about how we were being ripped off by these countries,” he quipped.

The president also used the moment to renew his push for broader economic reforms, urging Congress to eliminate federal taxes on tips, overtime pay, and Social Security benefits. He also proposed allowing Americans to write off interest on domestic auto loans.

Critics of the plan warned it could raise prices for consumers, noting inflation has already risen 22% under the Biden administration. However, Trump pointed to low inflation during his first term—when he imposed more targeted tariffs—as proof his strategy can work without sparking runaway costs.

White House officials reportedly described the new baseline rate as a guardrail against countries attempting to game the system. One official explained the methodology behind the reciprocal tariffs: “The trade deficit that we have with any given country is the sum of all trade practices, the sum of all cheating,” adding that the tariffs are “half of what they could be” because “the president is lenient and he wants to be kind to the world.”

In addition to Wednesday’s sweeping changes, Trump’s administration recently imposed a 25% tariff on Chinese goods tied to fentanyl smuggling and another 25% on steel and aluminum imports—revoking previous carve-outs for countries like Brazil and South Korea. Future tariffs on semiconductors, pharmaceuticals, and raw materials such as copper and lumber are reportedly under consideration.

Trump closed his remarks with a message to foreign leaders: “To all of the foreign presidents, prime ministers, kings, queens, ambassadors… I say, ‘Terminate your own tariffs, drop your barriers.’” He declared April 2nd “the day America’s destiny was reclaimed” and promised, “This will indeed be the golden age of America.”

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2025 Federal Election

Three cheers for Poilievre’s alcohol tax cut

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By Franco Terrazzano

The Canadian Taxpayers Federation applauds Conservative Party Leader Pierre Poilievre’s commitment to end and reverse the alcohol escalator tax.

“Poilievre just promised major alcohol tax cuts and taxpayers will cheers to that,” said Franco Terrazzano, CTF Federal Director. “Poilievre’s tax cut will save Canadians money every time they have a cold one with a buddy or enjoy a glass of Pinot with their better half and it will give Canadians brewers, distillers and wineries a fighting chance against tariffs.”

Today, federal alcohol taxes increased by two per cent, costing taxpayers about $40 million this year, according to Beer Canada.

Poilievre announced a Conservative government “will axe the escalator tax on wine, beer and spirits back to 2017 levels, ending the automatic annual tax increases.”

The alcohol escalator tax has automatically increased excise taxes on beer, wine and spirits every year, without a vote in Parliament, since 2017. The alcohol escalator tax has cost taxpayers more than $900 million since being imposed, according to Beer Canada.

Taxes from multiple levels of government account for about half of the price of alcohol.

Meanwhile, tariffs are hitting the industry hard. Brewers have described the tariffs as “Armageddon for craft brewing.”

“Automatic tax hikes are undemocratic, uncompetitive and unaffordable and they need to stop,” Terrazzano said. “If politicians think Canadians aren’t paying enough tax, they should at least have the spine to vote on the tax increase.

“Poilievre is right to end the escalator tax and all party leaders should commit to making life more affordable for Canadian consumers and businesses by ending the undemocratic alcohol tax hikes.”

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