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The gap in living standards between Canada and the U.S. has more than doubled over the past quarter-century, with Canada increasingly lagging behind the U.S., according to a new study by the Fraser Institute.
The report by the fiscally conservative think tank also found the sharpest decline occurred post-2014, meaning during the decade the Justin Trudeau government was in power.
The study compared real (inflation-adjusted) GDP per person in Canada to the U.S., a widely accepted measure of the standard of living in both countries, from 1999 to 2024.
It found in 1999, real GDP per person in Canada was $48,076 compared to $58,842 in the U.S. in constant Canadian dollars, a gap of $10,766.
But by 2024, the gap had increased to $23,757, at $59,529 in Canada compared to $83,286 in the U.S.
The study noted the steepest decline started after 2014, when Canada’s real GDP per person as a share of the U.S. economy fell from 83.1% in that year to 71.5% in 2024.
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“This reflects the fact per-person GDP growth in Canada largely stagnated during this time, while growth continued in the U.S. at a strong pace,” the study concludes.
“From 2014 to 2024, GDP per person in Canada grew just 3.2% compared to 20.1% in the U.S. … Despite some early hopes prior to 2014, Canada has made virtually no economic progress relative to its southern neighbour and has instead fallen further behind where it stood at the turn of the century.”
“It’s abundantly clear Canadian policymakers have failed to create an environment where we can prosper,” said Jake Fuss, co-author of the study, “Squandering the Canadian Century, Part 1: Comparing Economic Performance in Canada and the United States.”
The study found the Canadian economy lagging behind the U.S. in numerous other areas.
For example, in 2010, the earliest year of comparable data, inflation-adjusted median employment income was $6,126 higher in the U.S. than in Canada, which had increased to $8,663 in 2024.
From 1999 to 2024, Canada experienced a decline in private sector employment as a share of total employment from 81.2% to 78.5%, meaning the public sector grew faster than the private sector, while in the U.S. the reverse happened — private sector employment increased from 85.8% to 86.5%.
From 1999 to 2025, labour productivity — the ability of an economy to transform raw materials and other inputs into goods and services, which is a key driver of economic growth — more than doubled in the U.S, compared to Canada — increasing by 67.9% in the U.S. compared to 26.7% in Canada.
Canada also experienced a rapid decline in business investment in Canada relative to the U.S. from 2007 to 2024— another key driver of productivity — falling from nearly 90-cents per worker for every dollar invested in the U.S. to 54 cents.
It should be noted that while real GDP per capita is the most common tool used to determine a country’s standard of living, critics say it fails to capture the quality of life experienced by the average person because it doesn’t measure such things as income inequality, life expectancy, health and education, hours of work and can be distorted by the number of ultra-rich compared to those living in poverty.