Canada’s economy

has been trailing behind the United States for years, according to a report from

Statistics Canada

published on Wednesday, and oil prices and immigration are some of the factors to blame.

The agency

highlighted

three key measures of economic performance —

labour productivity

, real

gross domestic product

(

GDP

) per capita and real gross national income (GNI) per capita — and how they stand in Canada compared with the U.S.

“The U.S. (is Canada’s) closest neighbour (and has) the

largest economy in the world

,” Carter McCormack, Statistics Canada analyst and co-author of the report, told Financial Post. “It’s important to compare how our economy is doing relative to theirs.”

Labour productivity growth

in Canada hasn’t kept pace with the U.S. since 1997 and has plunged 26 per cent relative to that country, Statistics Canada reported.

Labour productivity is measured by dividing GDP by total hours worked and indicates how effectively labour has translated into outcomes for businesses and consumers. Greater productivity means more goods and services are getting produced with the same amount of work. This can improve consumers’ purchasing power through lower prices or higher wages.

McCormack said Canada’s economy depends more on smaller companies, which are typically less productive compared with larger companies in the U.S. Also, the U.S. boasts greater investments in information and communications technology and intangible capital, such as research and development, which has contributed to their greater productivity growth, he said.

Nicolas Vincent, external deputy governor of the Bank of Canada, wrote in a

November note

that productivity is a key driver of wage growth and living standards.

“If our productivity growth since 2000 had been similar to that of other G7 countries, our

GDP in Canada

today would be about nine per cent higher, which translates to almost $7,000 per person,” Vincent said.

Unlike labour productivity growth, between 1997 and 2015, Canadian real GDP per capita grew on par with the U.S.

Real GDP per capita, calculated by dividing the real GDP of the country by its total population, measures the average income generated per person from domestic production.

Canada’s real GDP growth emerged from increases in hours worked in Canada due to more people working at the time, said McCormack. The national labour participation rate climbed steadily since 1997, peaking at 67.6 per cent in 2008, before falling below 67 per cent in 2011, according to Statistics Canada.

After 2015, falling commodity prices and surging population growth through immigration became a factor in slowing GDP growth.

This was in part due to falling commodity prices, as Canada has long been a major exporter of resources such as oil and gas. Before then, from the 2000s onward, Canada’s GDP had benefitted from the rising cost of commodities, McCormack said.

A downward oil price shock in the mid-2010s saw Brent crude prices crash from about US$110-a-barrel to a low of US$29 in January 2016. Canada’s economic growth in 2015 and 2016 dropped to its weakest levels since the 2008-2009 recession, according to Statistics Canada.

Meanwhile, Canada’s population topped 36 million for the first time in 2016, mainly due to an uptick in immigration. Canada added 1.8 million people between 2016 and 2021.

Canada’s GDP per capita output compared with the U.S. in the third quarter of 2025 was 14 per cent below early 1997 levels, according to the Statistics Canada report.

Real GNI per capita serves as an indicator of purchasing power for Canadians, or the volume of goods and services each person can purchase with income earned from production. This measure is influenced by real GDP growth, as well as gains in trade (prices of exports compared with imports).

Higher commodity prices between 1997 and 2015 drove growth of real GNI per capita in Canada to outpace that of the U.S.

“Effectively, Canada was able to buy more imports (e.g., computers, industrial machines) for each export (e.g., barrel of oil) it sold on international markets,” Statistics Canada analysts wrote in the report. “The same commodity price movements held back real GNI per capita growth in the United States over that period, since the United States was a net importer of many commodities, particularly oil.”

But after the 2008 recession and the oil price plunge in 2015, Canada’s relative real GNI per capita began to decline. By the third quarter of 2025, it had sunk 10 per cent below what it was in the late 1990s in relation to the U.S.

McCormack said that even though these economic measures have been trending downward in comparison with the U.S., this doesn’t mean Canada’s economy is performing poorly.

“We’re still experiencing growth throughout this entire period,” he said. “It’s just the U.S. is growing relatively faster than us.”

Analysts will be keeping an eye on commodity prices, energy exports and levels of investment going into productive industries in Canada, he said.

Toronto-Dominion (TD) Bank economists wrote in a

recent report

that Canadian economic growth is expected to run below trend through 2026, as output slows down amid lower population growth and reduced export demand and business and consumer sentiment thanks to the trade war.

In comparison, the TD economists forecasted the U.S. economy will run slightly above its long-run trend rate of growth in 2026/27, due partly to fiscal policy, easing in regulations and investments in artificial intelligence.

• Email: slouis@postmedia.com

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