This article originally appeared in the Financial Post. Below is an excerpt from the article, which can be read in full here.
By Philip Cross, May 10, 2023
Over the last ten years real GDP per capita grew just 0.8 per cent a year on average in this country, its lowest rate of growth since the 1930s. Total GDP has been growing because of our growing population. But GDP per person has been essentially stagnant. This extended period of slow growth has widened the gap between per capita growth in the United States and Canada, demonstrating that the causes of our slumping growth are domestic, not external.
From the fourth quarter of 2016 to the end of 2022, real per capita GDP rose 11.7 per cent in the U.S., but only 2.8 per cent in Canada. The U.S. outgrew us before, during and after the pandemic. From 2016 to the end of 2019 it outpaced us by 3.5 percentage points. During the worst of the pandemic, in the first half of 2020, per capita real GDP fell 9.7 per cent in the U.S. versus 13.2 per cent here. And since mid-2020, it has grown 15.3 per cent in the U.S. versus only 14.1 per cent here. The Americans’ ability to sustain growth over the past decade shows that our stagnation was not the inevitable result of population aging or the exhaustion of technological innovations — which are hitting them, too — but instead reflects factors under our control.
There is growing recognition that we need to address our faltering rate of economic growth. Business leaders have been ahead of the curve on this issue. In early 2019, The Business Council of Canada launched its Task Force on Canada’s Economic Future, which focused on six policy areas where action is needed to enhance Canada’s economic prospects. Former finance minister Bill Morneau wrote last year that one reason he ran for office in 2015 was that “Canada’s economic growth had been stalled for two decades or more and it needed to be resuscitated.” As minister, he did appoint an Advisory Council on Economic Growth, but the growth slowdown actually worsened during his time in office. Another pro-growth initiative is the bipartisan Coalition for a Better Future, headed by former cabinet ministers Lisa Raitt (a Conservative) and Anne McLellan (a Liberal). Its objective is to build consensus on how to encourage growth, raise productivity, boost competitiveness and manage climate policy.
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