Friday, May 16, 2025
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Economic Policy
      • Justice
      • Rights and Freedoms
      • Assisted Suicide (MAID)
      • Health Care
      • COVID-19
      • Gender Identity
      • Canada’s Political Tradition
      • AI, Technology and Innovation
      • Media and Telecoms
      • Housing
      • Immigration
      • Agriculture and Agri-Food
      • Competition Policy
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Israel-Hamas War
      • Ukraine
      • Taiwan
      • China
      • Europe and Russia
      • Indo-Pacific
      • Middle East and North Africa
      • North America
      • Foreign Interference
      • National Defence
      • National Security
      • Foreign Affairs
    • Indigenous Affairs
  • Projects
    • CNAPS (Center for North American Prosperity and Security)
    • The Promised Land
    • Voices that Inspire: The Macdonald-Laurier Vancouver Speaker Series
    • Dragon at the Door
    • Canada on top of the world
    • Justice Report Card
    • The Great Energy Crisis
    • DisInfoWatch.org
    • Double Trouble
    • Digital Policy & Connectivity
    • Managing Indigenous Prosperity
    • Defending The Marketplace of Ideas
    • Reforming the University
    • Past Projects
      • Canada and the Indo-Pacific Initiative
      • The Transatlantic Program
      • COVID Misery Index
        • Provincial COVID Misery Index
        • Beyond Lockdown
        • COVID and after: A mandate for recovery
      • Speak for Ourselves
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
      • Centre for Advancing Canada’s Interests Abroad
      • Indigenous Prosperity at a Crossroads
        • Aboriginal Canada and Natural Resources
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Inside Policy
  • Libraries
    • Columns
    • Commentary
    • Papers
    • Books
    • Video
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Economic Policy
      • Justice
      • Rights and Freedoms
      • Assisted Suicide (MAID)
      • Health Care
      • COVID-19
      • Gender Identity
      • Canada’s Political Tradition
      • AI, Technology and Innovation
      • Media and Telecoms
      • Housing
      • Immigration
      • Agriculture and Agri-Food
      • Competition Policy
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Israel-Hamas War
      • Ukraine
      • Taiwan
      • China
      • Europe and Russia
      • Indo-Pacific
      • Middle East and North Africa
      • North America
      • Foreign Interference
      • National Defence
      • National Security
      • Foreign Affairs
    • Indigenous Affairs
  • Projects
    • CNAPS (Center for North American Prosperity and Security)
    • The Promised Land
    • Voices that Inspire: The Macdonald-Laurier Vancouver Speaker Series
    • Dragon at the Door
    • Canada on top of the world
    • Justice Report Card
    • The Great Energy Crisis
    • DisInfoWatch.org
    • Double Trouble
    • Digital Policy & Connectivity
    • Managing Indigenous Prosperity
    • Defending The Marketplace of Ideas
    • Reforming the University
    • Past Projects
      • Canada and the Indo-Pacific Initiative
      • The Transatlantic Program
      • COVID Misery Index
        • Provincial COVID Misery Index
        • Beyond Lockdown
        • COVID and after: A mandate for recovery
      • Speak for Ourselves
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
      • Centre for Advancing Canada’s Interests Abroad
      • Indigenous Prosperity at a Crossroads
        • Aboriginal Canada and Natural Resources
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Inside Policy
  • Libraries
    • Columns
    • Commentary
    • Papers
    • Books
    • Video
No Result
View All Result
Macdonald-Laurier Institute

Persistent lockdowns, poor business investment drive surprise drop in GDP: New Quarterly Economic Report

September 28, 2021
in Experts, Issues, Latest News, Leading Economic Indicator, Commentary, Library, Projects, COVID-19, Releases, Philip Cross
Reading Time: 3 mins read
A A

OTTAWA, ON (September 28, 2021): The second quarter of 2021 saw an unexpected contraction of Canada’s economy, shrinking by 0.3 percent. What caused this drop, and why is it that Canada’s economic growth consistently lags growth in the US?

These questions are explored in the Macdonald-Laurier Institute’s latest Quarterly Economic Report by MLI Senior Fellow Philip Cross, titled “What caused the surprise GDP drop and why Canada actually has US-style inflation.” According to Cross, serious issues are impacting Canada’s economy that are flying under the radar.

“The [0.3 percent] drop in quarterly GDP was far below the consensus forecast of 0.6 percent growth,” writes Cross, who notes that this divergence between expectations and reality was one of the largest ever. In examining why the initial estimates were so far off, Cross points to the way Statistics Canada sets baseline years for price indices.

Driving this drop in GDP was a widespread slump in demand linked to government lockdown policies in response to the pandemic that persisted into Q2. Additionally, housing receded, which is significant as housing is often an economic driver in Canada, and exports also declined largely due to car manufacturing supply chain issues.

An increase in the oil and gas sector helped blunt the damage. However, if not for major gains in retail and farm inventories, Cross finds that Canada’s GDP would have dropped by fully 1 percent.

While these most recent numbers are startling, they follow a larger trend of relatively poor growth in Canada. “Since the federal election in October 2015, the growth of real GDP per capita in Canada has consistently lagged behind the United States,” says Cross. He points to the fact that “real GDP in the US rose 10.9 percent versus a 6.8 percent gain in Canada” over this period.

This lacklustre growth has occurred even though Canada’s population has been growing faster than the US population. Yet, the US economy contracted less during the pandemic and recovered more quickly.

The root of this difference can be found in stronger business investment in the US. Cross finds that reductions in corporate income taxes and streamlined regulations introduced under the Trump administration help explain why business investment in the US had surged by 15.5 percent in the three years leading up to the pandemic.

“By comparison, business investment in Canada has fallen 30 percent since the fourth quarter of 2014.”

Additionally, Cross discusses inflation in the US and Canada, outlining how inflation in Canada may be closer to the elevated levels of the US than many assume. The Consumer Price Index (CPI) in the US is measured differently than in Canada. These different methodologies account for an apparent gap of 40 percent. Measured along more methodologically consistent lines, inflation in Canada and the US are within one percent of one another.

All in all, Q2 2021 was unexpectedly poor for Canada. While leading indicators are pointing to some recovery for the second half of the year, inflation and continued anemic GDP growth pose significant challenges for the next government.

To read the full report, click the button below.

***

Philip Cross is a Munk senior fellow at the Macdonald-Laurier Institute. Prior to joining MLI, Mr. Cross spent 36 years at Statistics Canada specializing in macroeconomics.

For more information, media are invited to contact:

Brett Byers
Communications and Digital Media Manager
613-482-8327 x105
brett.byers@macdonaldlaurier.ca

 

Tags: economic policyeconomyGDPQuarterly Economic ReportCOVID-19Philip Cross

Related Posts

Welcome to the post-progressive political era: Eric Kaufmann in the Wall Street Journal
Social Issues

Welcome to the post-progressive political era: Eric Kaufmann in the Wall Street Journal

May 16, 2025
Spike in church arsons puts reconciliation at risk: Ken Coates and Edgardo Sepulveda for Inside Policy Talks
Domestic Policy

Spike in church arsons puts reconciliation at risk: Ken Coates and Edgardo Sepulveda for Inside Policy Talks

May 16, 2025
Legacy on Trial: Revisiting Macdonald and Diefenbaker
Fathers of Confederation

Legacy on Trial: Revisiting Macdonald and Diefenbaker

May 15, 2025
Next Post
Biden sells twisted fiscal concepts: Jack Mintz in the Financial Post

Biden sells twisted fiscal concepts: Jack Mintz in the Financial Post

Newsletter Signup

  Thank you for Signing Up
  Please correct the marked field(s) below.
Email Address  *
1,true,6,Contact Email,2
First Name *
1,true,1,First Name,2
Last Name *
1,true,1,Last Name,2
*
*Required Fields

Follow us on

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario, K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

  • Inside Policy Magazine
  • Annual Reports
  • Jobs
  • Privacy Policy

© 2023 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Economic Policy
      • Justice
      • Rights and Freedoms
      • Assisted Suicide (MAID)
      • Health Care
      • COVID-19
      • Gender Identity
      • Canada’s Political Tradition
      • AI, Technology and Innovation
      • Media and Telecoms
      • Housing
      • Immigration
      • Agriculture and Agri-Food
      • Competition Policy
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Israel-Hamas War
      • Ukraine
      • Taiwan
      • China
      • Europe and Russia
      • Indo-Pacific
      • Middle East and North Africa
      • North America
      • Foreign Interference
      • National Defence
      • National Security
      • Foreign Affairs
    • Indigenous Affairs
  • Projects
    • CNAPS (Center for North American Prosperity and Security)
    • The Promised Land
    • Voices that Inspire: The Macdonald-Laurier Vancouver Speaker Series
    • Dragon at the Door
    • Canada on top of the world
    • Justice Report Card
    • The Great Energy Crisis
    • DisInfoWatch.org
    • Double Trouble
    • Digital Policy & Connectivity
    • Managing Indigenous Prosperity
    • Defending The Marketplace of Ideas
    • Reforming the University
    • Past Projects
      • Canada and the Indo-Pacific Initiative
      • The Transatlantic Program
      • COVID Misery Index
      • Speak for Ourselves
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
      • Centre for Advancing Canada’s Interests Abroad
      • Indigenous Prosperity at a Crossroads
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Inside Policy
  • Libraries
    • Columns
    • Commentary
    • Papers
    • Books
    • Video

© 2023 Macdonald-Laurier Institute. All Rights reserved.

Lightbox image placeholder

Previous Slide

Next Slide

Share

Facebook ShareTwitter ShareLinkedin SharePinterest ShareEmail Share

TwitterTwitter
Hide Tweet (admin)

Add this ID to the plugin's Hide Specific Tweets setting: