Well Canada Day is once again upon us – we now have 147 years of Confederation to celebrate– and what better way to celebrate than with a brief retrospective of economic performance as measured by per capita GDP. For your viewing pleasure, I present real per capita GDP in $2002 for each of the main census years since 1867 as well as a calculation of the average annual growth rate of real per capita GDP for each decade.
The data for the 1870 to 1960 period is from the historic GDP estimates and work done by the late Mac Urquhart and Alan Green at Queen’s University Kingston while the post 1960 data is from Statistics Canada. Figure 1 plots the real per capita GDP numbers and shows that from an estimate of $2,104 in 1871, real per capita GDP in Canada grew to $39,560 by 2011. Real per capita GDP in 2011 is 19 times what it was in 1871.
Figure 2 plots the decade average growth rates in real per capita GDP and the results here are quite interesting. The period prior to World War I shows rising average growth rates with a drop during the decade of World War I. The 1920s were very strong and were followed by of course the dismal Great Depression decade. Growth in real per capita GDP in the post war era is quite robust until the 1960s and then the rates begin to decline. This is a pretty graphic illustration of the slowdown that has afflicted Canada and other economies since the 1970s and from which we have yet to emerge. In retrospect, the 1970s don’t look so bad at least in terms of real per capita income growth. On the other hand, despite the Great Recession of 2009, the first decade of the twentieth century was not akin to the Great Depression of the 1930s. At least based on this data, that period was indeed unique. However, the period since 1990 actually has lower per capita income growth than the 1870s - which until the 1930s - were sometimes referred to as the Great Depression. For those who argue that we are at the end of growth and growth rates will return to nineteenth century norms, we may be already there. The last few decades of per capita GDP growth do not look much different from the 1870s and 1880s which are often seen as an age of economic stagnation in Canada - compared to the boom periods of the 20th century.
What is also of interest is the difference in the impact of world war with the 1940s being a period of high growth while the decade of WWI being one of very low growth. It suggests that war need not always be the economic stimulus it is sometimes portrayed as in popular discussion. However, WWI era starts with a crash that followed the western expansion boom of prairie settlement in Canada whereas the WWII era was a rebound after the crash of the Great Depression. On the other hand, these numbers have been presented in a pretty aggregated form and specific annual differences are quite important. While not plotted here, what is also interesting is that variability in annual growth rates really drops in this data after 1960. On the one hand, this may mean the economy has become more stable over time. Or, it simply means that the data after 1960s is simply better with fewer outliers when it comes to GDP (for example 1922 and 1925-26 have some pretty big growth differentials).