The latest briefing note from the Parliamentary Budget Office suggests that may not actually be the case — not if you look at Gross Domestic Income instead of Gross Domestic Product, that is:
On March 2, Statistics Canada released its National Income and Expenditure Accounts for the fourth quarter of 2008. Statistics Canada estimates that Canadian real Gross Domestic Product (GDP) declined by 3.4% in the fourth quarter while the U.S. Bureau of Economic Analysis estimates a 6.2% decline in U.S real GDP.1 Statistics Canada and others have highlighted Canada’s relative real GDP performance, noting that in addition to the U.S. decline, “the European Union registered a decline of 5.9% in the quarter, while Japan’s economy was down 12.7%”
Among those “others” who have highlighted GDP performance is, of course, the Prime Minister. From yesterday’s speech:
So far, in fact, while the global recession has hit Canada hard, not nearly as hard as it has other countries. The American economy has been hit twice as hard as Canada. The same is true for the Europeans. The Japanese have been hit four times as hard.
Unless ITQ is very much mistaken, the PM’s assurance that Canada hasn’t been hit “nearly as hard” as other countries is based on comparative declines in GDP, as listed above. But according to the PBO, those numbers only provide a “limited snapshot”. The big picture, it seems, isn’t nearly as encouraging [emphasis added]:
Comparing Canada and U.S. fourth-quarter real GDP in 2008 with its year-ago level provides a better reflection of recent trend growth, which suggests a similar performance in the two economies. More importantly, based on a more relevant performance indicator – real Gross Domestic Income (GDI) – Canada’s fourth-quarter performance is weaker than real GDP estimates would suggest. […]
In the first half of 2008, Canadian real GDI increased sharply while U.S. real GDI stagnated. However, with the reversal in commodity prices and consequently the terms of trade, Canada’s real GDI declined in the second half of the year, plunging by 15.3% in the fourth quarter – ten times larger than the (1.5%) decline observed in the U.S.
Despite Canada’s stronger growth in the first half of the year, the unprecedented decline in Canadian real GDI in the fourth quarter resulted in a fourth-quarter level 2.1% lower than in the same quarter of the previous year. In contrast, U.S. real GDI in the fourth quarter was only slightly lower than its year-ago level (0.7%).
UPDATE: Apparently, ITQ was not very much mistaken when she speculated that the PM was using these very numbers to bolster his contention that Canada hasn’t been as badly battered by the crisis as the rest of the world. From the brand spankin’ new Action Plan website launched earlier this morning by the Harper Government*:
While Canada’s GDP contracted during the last quarter of 2008, it was barely half the contraction experienced in the U.S. and Europe, and only one-quarter as bad as the contraction in Japan.
*Yes, the Harper Government. According to the new site, that is, apparently, the moniker by which it now wishes to be known. The word “Conservative” doesn’t appear anywhere at all, most likely to avoid accusations of using a government-funded site for partisan purposes.