It's Just An Economy

This is winning, right?:

Mark Carney spent the weekend telling Canadians to check their bank accounts. He said more than 12 million people would get the next Canada Groceries and Essentials Benefit payment. Earlier, he called it a boost of up to $1,890 this year to help families with essentials while the country waits for the payoffs of “building big.”

He may as well be celebrating increased food bank use while his government continues to bungle the management of Canada’s economy.

Sit with that number. Canada has about 41 million people. Twelve million is not a fringe, and it is not “some households having a hard month.” It is approaching three-in-ten Canadians receiving a government deposit whose purpose is to help them buy groceries and cover basic bills. Ottawa’s promotion of this benefit constitutes a formal acknowledgement.

A payment that exists so people can afford food is not growth. It is a transfer. The money is taxed out of paycheques, borrowed against future paycheques, or both, then sent back to a list of recipients the same government drew up. Calling it a benefit does not change the direction. A larger share of private income is being collected and handed back, with Ottawa deciding who qualifies and how much is enough to get through the till at the grocery store. This trend can only lead somewhere bad.

If the economy were producing rising real incomes, you would not need an essentials payment covering a population more than twice the size of Alberta. The cheque is the evidence that prices for food, housing, and energy have outrun take-home pay for a wide band of households and that the response has been to widen the transfer instead of addressing the cause. Government gets bigger. The administrative state gets another program to run, another eligibility rule, and another deposit to announce. Disposable income, after tax and after the cost of necessities, does not get bigger. The payment is then held up as proof that someone is helping. They reach into your wallet, take out some cash, and then hand a small portion of it back to you and expect gratitude.

(Sidebar: or being bribed with your money.) 

This is how a welfare state actually expands. Not with one vote to replace work with benefits, but with a run of “temporary” top-ups that become recurring deposits. Each one is justified by the cost of living the last round of policy helped produce. Housing stays scarce. Energy and food stay expensive. Taxes and deficits stay high enough that wages never quite pull ahead of the bills. Then a new payment lands and politicians pat themselves on the back. No future politician will find the courage to cut these transfers, which will quickly become entitlements in the eyes of recipients.

The political incentive only runs one way. A deposit in millions of accounts can be photographed and cheered as a success. The government’s inaction on developing the economy remains in the background. Carney’s own wording gives it away. The big projects will take time, so here is money now. The projects don’t need more time. They need leadership with the political courage to get things done. Increasing welfare dependency doesn’t lead to a stronger economy. It compounds the problem. Dependence gets rebranded as a boost, and the number of people who need the boost becomes the achievement.

The figure worth arguing about is not how many Canadians received the payment. It is how many needed a government cheque to cover groceries in the first place. Celebrating the deposit treats the symptom as the solution. The country is not being lifted. It is being managed, one essentials payment at a time, while the share of Canadians who cannot cover the basics without Ottawa keeps growing.

Canada is on a cycle spiralling to the bottom. As the share of Canadians either employed by the government or dependent on government transfers grows, the ability of the productive to keep up is reduced. Professionals and enterprising individuals either stop producing or leave the country for greener pastures. It’s an unsustainable trend, but as long as people applaud the smiling face of the prime minister while he gifts them a portion of their own money, the trend won’t be changing. It’s too politically valuable for the establishment politicians and legacy media outlets who depend on them to shake the status quo. Better to continually play Santa Claus on the credit cards of the next generation than to make hard decisions today.

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Prime Minister Mark Carney has said that lower immigration under his government helps to explain why Canada’s economy has declined for the last two quarters, pushing it into recession territory.

While Carney has not said the word “recession” himself when asked about the decline — and while economists citing broader economic indicators argue Canada is not in a true recession — critics have said that years of high immigration intake served to conceal the extent of Canada’s economic troubles.

Those critics include Conservative immigration critic Michelle Rempel Garner, who posted on social media Tuesday that “mass rapid intake of low-skilled temporary foreign labour both masked and juiced structural economic issues.”

“It’s a basic fact, it’s one of several factors, but the underlying point is we’re putting in place the foundations a stronger, more resilient, more independent Canadian economy. You can do the math, you should do the math, in terms of declining population growth as an impact,” Carney said in response to that criticism.

Nathan Janzen is a Royal Bank of Canada economist who has done the math. He said high population growth, driven by immigration, contributed to a higher gross domestic product despite household economic challenges.

 

Now, about that:

Canada’s real gross domestic product remained flat in July following three months of expansion, an early sign that economic growth may have slowed in the third quarter following a second-quarter rebound.

Gains in construction, 1.3 per cent, and utilities, 1.7 per cent, were offset by decreases in the manufacturing and mining sectors in July, as well as quarrying and oil and gas extraction — which contracted by 0.9 per cent and 0.5 per cent month over month, respectively. Contractions in retail and wholesale trade also offset some increases in services-producing industries, weighing on economic growth.

Flash estimates suggest the economy expanded by 0.2 per cent in August, led by increases in mining and quarrying as well as retail trade that were partially offset by decreases in oil and gas extraction.

“The numbers are a mixed bag, and there’s a lot of things happening under the hood when you look at the monthly GDP numbers. It took a break in July, but it was in line with what’s going on,” said LJ Valencia, an economist with Desjardins.

“The weakness was pretty broadbased, but it was offset by some of the strength that we’re seeing.”

Economists largely expect growth to slow in the third quarter of 2026 due to economic uncertainty from escalating trade tensions with the United States, after the economy rebounded and grew by 3.3 per cent on an annualized basis in the second quarter.

Deloitte Canada’s latest economic outlook suggests the recent levies are expected to sharply weaken growth in the final quarter of 2026 and into early 2027. Forecast tables predict the Canadian economy will expand by 0.9 per cent on an annualized basis in 2026 and by 1.6 per cent in 2027.

Household and business confidence will also remain subdued due to the persistent threat of tariffs and additional trade measures, the report said.

“The past monetary tightening cycle and successive rounds of trade tensions have taken a toll on the Canadian economy. The most prominent weak spot in our economy continues to be business non-residential investment,” wrote Dawn Desjardins, Deloitte Canada’s chief economist.

 

 So there's that.