A Fraser Institute report finds Canadian GDP per capita now trails the US by CA$23,757 as productivity and business investment stagnate
Canada's living standard gap with the United States has more than doubled over the past quarter-century, with the average American now earning roughly CA$23,757 more per year in GDP per capita terms than the average Canadian, according to a new report from the Fraser Institute.
It shows that, in 1999, Canada's GDP per capita stood at CA$48,076 compared to CA$58,842 in the US (a gap of CA$10,766). By 2024, Canada's figure had reached $59,529 while the US surged to $83,286, widening the gap to CA$23,757. That represents an increase in the shortfall of more than 120 per cent over 25 years.
"After squandering the first quarter of the 21st century, it's up to policymakers in Canada to enact bold economic reforms," said Munro, senior policy analyst at the Fraser Institute.
Jake Fuss, the institute's director of fiscal studies, was equally pointed, saying Canadian policymakers had "failed to create an environment where we can prosper."
The productivity divide
The living standards gap is rooted in a widening productivity divide. Between 1999 and 2025, labour productivity in the US grew by 67.9 per cent, more than 2.5 times greater than Canada's growth of 26.7 per cent over the same period. The report notes that Canada largely kept pace with the US before 2014, but the divergence accelerated sharply thereafter.
Business investment tells a similar story. In 2007, Canadian businesses were investing about 89.6 cents for every dollar their US counterparts invested per worker. By 2024, that figure had collapsed to just 54 cents. In contrast, US business investment per worker rose 57.9 per cent over the same period, while Canada's fell 4.9 per cent.
These trends matter directly to Canadian financial advisors and wealth managers. Sluggish domestic productivity growth constrains corporate earnings, caps wage growth for clients, and limits the long-run return potential of Canadian equity portfolios relative to their US counterparts a dynamic that has fuelled persistent interest among Canadian investors in increasing their US equity allocations.
Employment trends compound the problem
The report also highlights a troubling shift in Canada's employment mix. Between 1999 and 2024, government-sector employment in Canada grew at an average annual rate of 2.0 per cent, compared to 1.3 per cent for the private sector.
In the US, the pattern was reversed: private-sector employment grew at 0.8 per cent annually versus 0.6 per cent for government.
As a result, Canada's private-sector share of total employment declined from 81.2 per cent in 1999 to 78.5 per cent in 2024, while the U.S. private-sector share actually rose, from 85.8 per cent to 86.5 per cent.
The income gap extends to median employment earnings as well. By 2024, the median employed American earned CA$8,663 more per year than the median employed Canadian, up from a gap of CA$6,126 in 2010.
Fiscal backdrop
The findings arrive against a backdrop of ongoing fiscal pressure in Canada. The federal government has made progress narrowing its deficit, but provincial red ink continues to grow, according to a separate analysis published last week.
Meanwhile, a TD Economics report released in late August 2026 identified more than CA$1 trillion in Canadian infrastructure projects queued for the next decade, conditional on structural policy reform; precisely the kind of reform the Fraser Institute says Canada has so far failed to deliver.
The authors of the report stop short of prescribing specific policies in Part 1, which focuses on diagnosis. They describe the past decade as a period in which Canada "squandered" a competitive position it had built in the years following the 1990s fiscal consolidation.
