The economists at BMO Capital Markets are celebrating Canada 150 in typical economist fashion — by putting out a research report.
In this case though, they're tackling quite a lot: Canada's economic performance going back all the way to Confederation in 1867.
"The country has changed tremendously in that time — from a largely agrarian society 150 years ago, to nearly a post-industrial society today," BMO chief economist Doug Porter wrote.
Wealthier, more productive
The first thing to note is that Canadians today are much, much wealthier and more productive than they were in 1867.
"The typical Canadian of today produces/consumes 15.2 times more than the typical Canadian 150 years ago," Porter wrote.
Canada's economy has grown by an average of 3.44 per cent per year in that time; on a per capita basis, it has grown 1.8 per cent per year.
So here's the really, really big picture on Canada's economy:
The economy used to be way more volatile
Until about the middle of the 20th century, Canada's economy was a roller-coaster, soaring and plunging often by double digits. But since the 1950s, things have been much more stable.
The single best year for growth that Canada ever saw was 1942, in the midst of a wartime manufacturing boom. The economy grew 18.7 per cent that year.
The worst year for Canada's economy was during the Great Depression — it fell 13 per cent in 1931. These days, booms and busts of that size are almost unthinkable. We live in much more stable times.
It's worth noting that similar patterns played out in most other developed countries over that time; this is hardly a Canada-only phenomenon.
Economic growth has been slowing for half a century
Once again, this is a trend seen not only in Canada. In the 1960s, Canada's economy averaged annual growth of around 5.2 per cent. Fifty years later, growth of around two per cent is pretty much the norm.
The 2000s were particularly weak. As Porter notes, that decade started with the dot-com bust and ended with the financial crisis of 2008-09. The 2010s have been slightly better so far, so perhaps this long-term downward trend may finally be coming to an end.
We used to have sub-5% unemployment rates
Canada's unemployment rate is sitting at 6.6 per cent and the experts tell us that's a very good number — just about as good as it gets these days. But go back to the 1950s and 1960s, and this country consistently saw jobless rates below five per cent. We can only envy those days.
But we certainly don't have to covet what came before that: the Great Depression, when Canada's official unemployment rate topped out at a record 19.3 per cent in 1931.
"By most accounts, unemployment soared to over 25 per cent during the worst of the Great Depression (as high as 30 per cent by some accounts)," Porter noted.
Nothing in recent history compares to that, and the data shows how, with each recession in recent decades, the spike in unemployment has been slightly less painful every time.
Super-high interest rates: A one-time fluke?
Those of us old enough to have lived through the '80s remember an era when you could pay 18 per cent interest on your mortgage. In our current era of sub-three-per-cent mortgages, that's almost impossible to imagine. And looking at interest rates over the past 80 years, it does seem like those high interest rates in the 1970s and '80s were an aberration:
"There are really only two big story lines" in the story of interest rates, Porter wrote: "A long, steady climb to a 1981 apex, and then a long, steady grinding decline to recent lows."
But those lows may already be coming to an end. The hawkish tone from the Bank of Canada recently has convinced many experts — including BMO's Porter — that interest rates may start rising as soon as July of this year.
With Canadian households sitting on a record amount of debt, let's hope those rates don't start climbing another decades-long mountain.
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