It's not getting any easier to afford a home or pay a mortgage
Canadians are not only feeling financially worse off than before the pandemic—they actually are, according to new analysis from the Fraser Institute.
The think tank’s commentary, authored by Tegan Hill and Grady Munro, reveals that Canada’s inflation-adjusted per-person GDP declined to $58,855 as of July 2025, falling below the $59,905 level recorded in mid-2019 before the pandemic began.
Statistics Canada data shows the country’s inflation-adjusted GDP shrank by 0.4% during the second quarter of 2025, from April through June. With population growth essentially flat during the same period, living standards measured by per-person GDP continued their downward trend.
The findings align with survey data indicating widespread financial distress among Canadians. According to the Fraser Institute analysis, 61% of survey respondents reported being financially worse off than before the pandemic, while 89% said managing expenses on everyday items like food and shelter has become more difficult.
The second-quarter decline may be partly attributed to US tariffs that began taking effect in March, the authors noted. They suggested that previous growth in the final two quarters of 2024 and early 2025 likely resulted from businesses and consumers shifting spending forward to avoid the threatened tariffs.
“Put simply, per-person GDP growth in previous two quarters may have been fuelled by a shift in spending, which also helped to set up the observed slowdown in economic activity once tariffs began to take effect,” the report stated.
However, the authors emphasized that Canada’s economic challenges predate the return of former president Donald Trump to office. The country’s living standards have remained stagnant since long before the recent policy changes.
By contrast, the United States saw its per-person GDP grow by 11.0% from mid-2019 to mid-2025 when adjusted for inflation, highlighting Canada’s relative economic underperformance.
The Fraser Institute identified several policy solutions to address the economic challenges, including removing interprovincial trade barriers and providing additional tax relief. The authors also highlighted government debt as an underexplored factor limiting economic growth.
Combined federal and provincial net debt is projected to reach $2.30 trillion in 2024-25, according to the analysis. The authors cited research suggesting that reducing Canada’s debt-to-GDP ratio to pre-pandemic levels could boost annual incomes for average employees by approximately $2,100 when adjusted for inflation.
“Governments across the country must pursue policies that promote economic growth,” the report suggested.
What are your thoughts on the recent analysis? Share your insights in the comments below.
