“A nation cannot spend its way into prosperity any more than a household can borrow its way into security.” By Adam Smith, The Wealth of Nations (1776)
Canada Is No Longer Economically Prosperous
This is my first of three Economic Prosperity posts.
In this post, I present the case for why I believe Canada Is No Longer Economically Prosperous.
Using these three posts as a foundation, I will be turning my focus toward five categories of posts — Economics, Political Governance, Public Sector, Private Sector, and Canadian Society — which will delve deeper into the underlying causes undermining our economic prosperity. I will also propose potential solutions to address these impediments.
Canadians deserve to live, prosper, and grow old once again in this wonderful country of ours.
Canada Is No Longer Economically Prosperous
A majority of Canadians feel like they’re working harder but falling further behind. They feel that rising costs, unstable jobs, and shrinking opportunities are making it harder to build a secure life.
Fraser Institute (Sept 2025): 89% of respondents reported it is harder to manage everyday expenses like food and shelter.
Angus Reid Institute (Dec 2025): 59% of respondents said the cost of living is their top concern.
Bank of Canada (Q3 2025): The Canadian Survey of Consumer Expectations indicates that overall consumer confidence remained well below historical averages.
In this first of many articles, I will argue that Canada is no longer economically prosperous. The reasons are numerous and complex. I will be identifying the most significant and complex reasons that have created this untenable situation, and propose potential solutions to address them.
Some readers may consider my views to be unreasonable if not unrealistic. My response is simple: my solutions are aspirational and have greater merit than what is being done by politicians currently sitting in the Canadian Parliament.
To round out this first article, I want to briefly speak to six key indicators that reinforce my view that Canada is no longer economically prosperous. I will discuss these indicators and many more complex issues in future articles.
1. Federal debt and interest payments
Over the past 40 years, Canada’s national debt has grown from about $208 billion in 1985 to $1.27 trillion in 2025. According to the Carney government’s November 2025 federal budget, that figure will climb to $1.59 trillion by 2030.
In 2025 alone, Ottawa will spend roughly $53 billion on interest payments — money that doesn’t reduce the debt, but simply services it. By 2030, those payments are projected to reach $76 billion.
This is deeply concerning for three reasons:
Emergency response: Canada will have less fiscal room to respond to future economic emergencies.
Deficit dependence: The sheer size of the debt makes it harder to break free from out-of-control deficit spending.
Crowding out: Rising interest costs will crowd out funding for essential national programs like healthcare, education, and infrastructure — directly affecting Canadians’ quality of life.
2. Deficit financing
Canada’s federal government spent $78 billion more than it collected in revenues during 2025–26. This isn’t a one-time emergency measure — it has become a habit.
Chronic deficit financing means Ottawa is living beyond its means, year after year. This matters because persistent deficits directly increase the national debt, limit government flexibility in future budgets, and signal to Canadians, foreign investors, and creditors that Canada is unable to balance its books.
3. Employment and job security
Canada’s unemployment rate fell to 6.5% in late 2025, which looks positive on the surface. But most of the new jobs were part-time with limited benefits.
For Canadians, prosperity should translate into secure, well-paying jobs, upward career and income mobility – not patchwork hours and uncertain futures.
4. Inflation and cost of living
Although headline inflation has cooled to around 2.2%, close to the Bank of Canada’s target, Canadians still feel squeezed because prices are rising faster on the essentials: food prices are up 3–4%, and rent inflation is above 5%.
This disconnect matters. Even if economists and the government say inflation is “under control,” Canadians know their grocery bills and housing costs tell a different story.
Prosperity should mean breathing room in household budgets, not constant financial pressure.
5. GDP growth
Canada’s economy grew 0.6% in the third quarter of 2025, rebounding from a contraction earlier in the year.
Annualized growth was 2.6%, but much of it came from government defence spending — an 82% surge in spending on weapon systems — rather than household consumption or private investment.
That’s fragile growth. When prosperity depends on government spending instead of robust private sector growth and strong consumer confidence, it will not translate into long-term improved living standards for Canadians.
6. Housing affordability
Housing affordability in Canada has deteriorated on two fronts: entry into homeownership and the sustainability of ownership costs. Canadians must first save for increasingly unattainable downpayments, then contend with mortgage payments that consume an outsized share of household income.
According to the Fraser Institute, in 2023 the cost of a 20% downpayment on a typical home required 22 months of median after-tax income, up from 14 months in 2014. That represents a 56% increase in less than a decade. At the same time, the share of income needed to cover a typical mortgage payment rose from 29.9% to 56.6%, forcing many families to devote more than half their disposable income to housing.
Even with modest relief in 2025, the National Bank’s Housing Affordability Monitor reports the mortgage payment-to-income ratio at 53.4% in Q2 2025, its lowest in three years but still far above the historical average of 40.2%.
The implications are stark. First-time home buyers face steep barriers to entry, while existing owners remain financially strained. In Ontario and British Columbia, where housing prices are highest, the dream of homeownership is increasingly unattainable, and renters have to devote ever larger portions of their income to housing.
Conclusion
Together, these six indicators show a country under strain. Chronic deficits, insecure jobs, rising costs, fragile growth, and unaffordable housing are a toxic mix. Even where numbers look positive, the lived reality for Canadians is far less encouraging.
It is for these reasons and many other troubling issues facing our country that I say Canada is no longer economically prosperous.
