The federal government must replace its obsession with gross domestic product, a broad measure of how much the economy produces in a year, with a focus on GDP per capita
The distinction between the two measures may seem trifling at first, but it is important. At a time like now, when Canada’s population is expanding at its fastest pace in decades, GDP by itself offers a flawed guide to how typical Canadian householdsThe problem arises because a larger population automatically means more workers, more productive capacity and therefore higher potential GDP.
While people can debate exactly how best to measure this trend, “it’s clear that GDP per capita growth in Canada has been sluggish,” says Mikal Skuterud, a professor of economics at the University of Waterloo, who recently tweeted a chart showing Canada’s woeful performance on this measure.The Bank of Canada estimates that Canada’s economy will grow 1.4 per cent this year and 1.3 per cent in 2024. That sounds, at first, like slow but steady growth.
Politicians have always danced around this question, but the stresses are reaching crisis levels. Canada has historically averaged 0.61 housing starts for every additional working-age person, according to National Bank of Canada. Today, after a bumper quarter for population growth, we are down to just 0.27 – less than half the historical pace and the lowest number on record.
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