Indicators of Economic Well-being in Canada

loprespub

3 months ago

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Gross domestic product (GDP) is the primary indicator of an economy’s health. It measures the market value of all final goods and services produced in a country over a set period. To account for inflation (changes in price rather than output), economists use real GDP, which adjusts nominal GDP for inflation by valuing production using the prices of a base year. This indicator provides a clearer picture of the actual volume of goods and services produced. Rising real GDP generally suggests that economic conditions are improving.

The average economic output per person, or GDP per capita, is obtained by dividing real GDP by the total population. Based on the idea that a higher per-person output corresponds to better living conditions, GDP per capita is commonly viewed as both an indicator of individual economic well-being and a representation of the standard of living of a country.

However, economists note that GDP per capita alone is an incomplete indicator of individual economic well-being, as it reflects average production rather than the incomes households actually earn. As a result, it can be heavily influenced by high earners, corporate profits or other economic activities that do not translate into shared prosperity for most Canadians. In contrast, median income provides a more direct measure of the individual’s typical economic position and is less sensitive to extremes in income distribution. This HillNote compares regional differences in GDP per capita and median income to illustrate how these indicators give varying estimates of economic well-being. The comparison highlights how the two indicators can diverge and identifies a gap in which additional measures are needed to assess economic well-being more fully.

Gross Domestic Product Per Capita in Canada

In Canada, real GDP per capita has generally increased over the past several decades (see Figure 1). However, notable declines were observed in the early 1980s recession and the 2007–2008 financial crisis, and a steeper decline was seen in 2020 during the COVID‑19 pandemic. In each case, GDP per capita rebounded after a downturn, demonstrating economic resilience. However, since late 2021, real GDP per capita has been relatively stagnant and at times it has declined, as high inflation and rising living costs have weighed on economic performance. Based on GDP per capita alone, this trend suggests that living standards are not improving.

Figure 1 – Real Gross Domestic Product Per Capita in Canada, Quarterly Data 1981–2025, Presented by First Quarter in Chained 2017 Canadian Dollars

Note: Chained 2017 dollars is a method implemented by Statistics Canada which adjusts for price changes to reflect real growth in gross domestic product.
Sources: Figure prepared by the Library of Parliament using data obtained from Statistics Canada,
“Table 36-10-0706-01: Gross domestic product per capita and other per capita macroeconomic indicators,” Database, accessed 4 December 2025.

Changes in GDP per capita reflect shifts in both GDP and population. For example, a decline in GDP per capita can occur when the GDP contracts or when population growth outpaces GDP growth. Figure 2 shows the growth rates of the components of GDP per capita. It indicates that the recent declines in GDP per capita are driven by a combination of accelerating population growth and slower GDP growth.

Figure 2 – Growth Rate (%) of Population and Real Gross Domestic Product (GDP) in Canada in Chained 2017 Canadian Dollars

Note: Gross domestic product per capita is calculated using the total population (all ages).
Sources: Figure prepared by the Library of Parliament using data obtained from Statistics Canada, “Table 17-10-0005-01: Population estimates on July 1, by age and gender,” Database, accessed 4 December 2025; and Statistics Canada, “Table 36-10-0699-01: Gross domestic product, expenditure-based, Canada, annual (x 1,000,000),” Database, accessed 4 December 2025.

Gross Domestic Product Per Capita by Province and Territory

Nominal GDP per capita, which values production at current prices without adjusting for inflation, was $74,039 in 2023. This figure varies widely across provincial and territorial economies. The territories, particularly Nunavut and the Northwest Territories, reported the highest values of GDP per capita (see Table 1), as part of a consistent trend driven by their small populations and the nature of their overall economies. Figures for British Columbia, Alberta and Saskatchewan also exceeded the national average, primarily due to the capital-intensive economies and larger working-age populations in these provinces, particularly in the oil sector.

Table 1 – Provinces and Territories, Nominal Gross Domestic Product (GDP), Population and GDP Per Capita, 2023

Region	Nominal GDP ($ x 1,000,000)	Total Population	GDP Per Capita ($)
British Columbia	414,465	5,515,296	75,148
Alberta	451,008	4,688,576	96,193
Saskatchewan	112,895	1,210,257	93,282
Manitoba	93,045	1,453,202	64,028
Ontario	1,138,592	15,632,481	72,835
Quebec	582,495	8,821,696	66,030
New Brunswick	46,463	831,103	55,905
Nova Scotia	60,487	1,053,005	57,442
Prince Edward Island	10,134	173,734	58,331
Newfoundland and Labrador	40,363	538,789	74,914
Yukon	4,182	45,419	92,076
Northwest Territories	5,346	44,614	119,828
Nunavut	4,899	40,916	119,733
Canada	2,965,201	40,049,088	74,039

Note: Data for 2024 is available, however, 2023 data is used to allow direct comparison with median income, as 2023 is the most recent year with disaggregated data available.
Sources: Table prepared by the Library of Parliament using data obtained from Statistics Canada, “Table 36-10-0222-01: Gross domestic product, expenditure-based, provincial and territorial, annual,” Database, accessed 4 December 2025; and Statistics Canada, “Table 17-10-0005-01: Population estimates on July 1, by age and gender,” Database, accessed 4 December 2025.

However, economists have long cautioned that GDP per capita was never designed to measure overall economic well-being. It does not account for income distribution, and it can misrepresent how well off the population truly is. For instance, while Canada’s nominal GDP per capita was $74,039 in 2023 (Table 1), only one quarter (26.1%) of tax filers in 2023 reported a total income of $75,000 and over.

Median Income as an Indicator of the Standard of Living

Median income represents the midpoint of income distribution, where half of tax filers earn more than the midpoint figure, and half of them earn less. Unlike GDP per capita, median income is less affected by extreme incomes, and as a result, it better reflects the typical financial situation of individuals. Total income includes all sources, such as employment income, investments, government transfers, private pensions and other incomes. In 2023, total median income was based on the 30.6 million individuals who filed tax returns. It should be noted that some of the most vulnerable groups, such as people who rely on social assistance, are less likely to file tax returns, which means the data may underestimate economic hardship.

Due to variations in the cost of living across provinces and territories, median income should only be compared to GDP per capita within each jurisdiction to identify regional income disparities, rather than being compared directly across jurisdictions. As shown in Figure 3a and Figure 3b, the largest relative differences between GDP per capita and median income are observed in Nunavut (97.9%), the Northwest Territories (66.3%), Alberta (67.0%) and Saskatchewan (68.9%). Notably, these regions also rank among those with the highest GDP per capita in the country. This observation suggests that a significant share of the economic output in these regions may be concentrated among high earners or large corporations rather than broadly distributed. In contrast, the smallest relative differences between indicators are found in Prince Edward Island (30.9%) and Nova Scotia (31.9%) – two provinces that also exhibit some of the lowest levels of GDP per capita in the country.

Figure 3a – Gross Domestic Product (GDP) Per Capita and Median Total Income in Canadian Provinces and Territories, Nominal Dollars, 2023

Note: The most recent year for which comparable data is available is 2023. Comparisons among provinces and territories should be interpreted carefully, as the differences in income do not consider differences in the cost of living and the age of the population, which are unique to each province and may affect median income.
Sources: Figure prepared by the Library of Parliament using data obtained from Statistics Canada, “Table 11-10-0008-01: Tax filers and dependants with income by total income, sex and age,” Database, accessed 4 December 2025; Statistics Canada, “Table 36-10-0222-01: Gross domestic product, expenditure-based, provincial and territorial, annual,” Database, accessed 4 December 2025; and Statistics Canada, “Table 17-10-0005-01: Population estimates on July 1, by age and gender,” Database, accessed 4 December 2025.

Figure 3b – Relative Difference (%) Between Gross Domestic Product Per Capita and Median Total Income in Canadian Provinces and Territories, 2023

Sources: Figure prepared by the Library of Parliament using data obtained from Statistics Canada, “Table 11-10-0008-01: Tax filers and dependants with income by total income, sex and age,” Database, accessed 4 December 2025; Statistics Canada, “Table 36-10-0222-01: Gross domestic product, expenditure-based, provincial and territorial, annual,” Database, accessed 4 December 2025; and Statistics Canada, “Table 17-10-0005-01: Population estimates on July 1, by age and gender,” Database, accessed 4 December 2025.

Nationally, median income falls well below GDP per capita, with the two measures differing by 48.8% relative to their average (Figure 3b). The data suggests that overall, GDP per capita tends to overstate economic well-being, as most Canadians do not experience the living standards it implies. Although median income remains well below GDP per capita in level terms, Figure 4 shows that it has grown at a faster rate than GDP per capita since the 2008 financial crisis. However, the recent rise in median income from 2020 to 2023 may be partly due to higher government transfers, including COVID-19 income support and benefits, which are included in the data for that period.

Figure 4 – Growth in Gross Domestic Product (GDP) Per Capita and Median Total Income in Canada, 2000 to 2023, in Real 2017 Dollars

Note: Median income is deflated using the Consumer Price Index to adjust for inflation.
Sources: Figure prepared by the Library of Parliament using data obtained from Statistics Canada, “Table 11-10-0008-01: Tax filers and dependants with income by total income, sex and age,” Database, accessed 4 December 2025; Statistics Canada, “Table 18-10-0005-01: Consumer Price Index, annual average, not seasonally adjusted,” Database, accessed 4 December 2025; Statistics Canada, “Table 36-10-0222-01: Gross domestic product, expenditure-based, provincial and territorial, annual,” Database, accessed 4 December 2025; and Statistics Canada, “Table 17-10-0005-01: Population estimates on July 1, by age and gender,” Database, accessed 4 December 2025.

While GDP per capita and median income offer valuable insights into living standards, they are insufficient on their own to fully capture overall economic well-being. These measures exclude non-market contributions, such as home production (e.g., cooking, cleaning, unpaid caregiving) and important dimensions of quality of life, including health, leisure time, environmental quality and income inequality. Additionally, factors such as cost of living, access to essential services, and cultural and language considerations, which are particularly significant for Indigenous populations, must be taken into account to develop a more complete picture of prosperity.