Canada lags behind other advanced economies on standard of living metrics, a new report has found, with persisting productivity issues being a leading contributor behind the trend.
In a TD Economics report released Thursday, Marc Ercolao, an economist at TD Bank, said that regardless of “solid headline growth in recent years,” Canada trails the U.S. and other economic peers regarding its standard of living, or real gross domestic product (GDP) per capita. He said that in 2014-15 oil price shocks contributed to underperformance in this area, which has continued following the COVID-19 pandemic.
“There may be a tendency to pin the blame for Canada’s sagging per-capita showing on the country’s rapidly-growing population base given that it has inflated the denominator of the calculation,” Ercolao said in the report.
“However, at the crux of the problem is insufficient growth in the numerator, which in turn is tied to longstanding productivity issues.”
Ercolao said that despite a pandemic-related economic downturn, growth in Canada’s economy has been aided by “supercharged immigration” and a “robust population,” that spurred consumption and demand for housing.
However, Ercolao said that strong levels of growth in the economy do not always equate to prosperity. He said when adjusted for Canada’s rising population, the economy “reveals a picture that leaves much to be desired.”
“This country’s lagging standing in per-capita GDP is not new, but it has been worsening since the pandemic,” Ercolao said.
He said while it may be easy to “point the finger” at fast-paced population growth, it would be an “oversimplification” to do so. He said that drastic increases in the nation’s population are far more recent than the downward trajectory of real GDP growth since the 1980s.
“At the core of the issue is a sagging productivity showing that has been plaguing the Canadian economy for many years despite the well-intentioned moves of this countries’ policymakers to try and address it,” Ercolao said.
On a regional basis, he said economies that deal mainly in commodities, like Alberta and Saskatchewan, record the highest levels of per capita GDP, but their relative strength has “come under some pressure over the past decade.”
CAUSES
Various factors contribute to Canada’s lack of economic productivity, according to Ercolao, including things like a lack of research and development (R&D) spending. He said the lack of funding in this area has led to an “innovation gap,” where Canadian R&D spending has been in “perpetual decline” for the last 20 years.
“As of 2021, Canadian R&D spending accounted for roughly 1.7 per cent of GDP, half of the current U.S. share and lower than most other countries,” Ercolao said.
According to Ercolao, other causes of Canada’s relatively low productivity include fewer investments since 2015 in non-residential structures, machinery and equipment, and intellectual property.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
