OPINION: Not a ‘vibecession’ — Canadian living standards are declining
During a recent press conference about the Trudeau government’s plan to send $250 cheques to many Canadians and suspend the GST on certain goods and services for two months, federal Finance Minister Chrystia Freeland said Canadians are experiencing a “vibecession,” which is creating negative feelings about the economy despite “really positive economic news.” According to Freeland, these two proposals, which will cost billions, will “help Canadians get past that vibecession.” In reality, the economic woes of Canadians are real and new data from Statistics Canada shows that Canadian living standards are declining. Let’s look at the numbers. From July to September 2024, after adjusting for inflation, the Canadian economy (as measured by Gross Domestic Product) grew by 0.3%, yet per-person GDP (an indicator of living standards and incomes) actually fell by 0.4%. How can the economy grow while living standards decline? Canada’s rapid population growth, fuelled by high levels of immigration, means the overall economy has increased in size but per-person GDP has not. During the same three-month period (July to September), Canada’s population increased by 0.6% (or 250,229 people), outpacing the rate of economic growth. Not merely a one-off, this continues a historic decline in Canadian living standards over the last five years. In June 2019, inflation-adjusted per-person GDP was $59,905 compared to $58,601 in September 2024, a decline of 2.2%. And while per-person GDP has ebbed and flowed during this decline, the third quarter of 2024 marks the sixth consecutive quarter that living standards have fallen in Canada. Last week, the House of Commons approved the government’s plan to temporarily suspend the GST on select items from Dec. 14 to Feb. 15, at an estimated cost of $1.6 billion (the legislation now goes to the Senate for approval). The government has delayed the “$250 cheques” plan to potentially accommodate NDP demands to expand eligibility to include seniors (the original proposal would have sent cheques to an estimated 18.7 million Canadians at a cost of $4.7 billion). Neither one of these proposals will incentivize Canadians to work and invest; therefore these proposals won’t help raise living standards. To help drive economic growth, create jobs and provide more economic opportunities for workers across the income spectrum, the federal government should reduce the overall tax burden on workers and businesses, and make Canada a more attractive place to work and invest. Despite any claims of a “vibecession,” Canadians remain mired in an actual recession in their standard of living. Freeland’s comments once again prove this government is disconnected from the reality many Canadians face. It’s not just bad vibes — the data shows Canadians are actually worse off today than they were in 2019. Jake Fuss and Grady Munro are analysts at the Fraser Institute
