A prominent economist says the Canadian economy is weaker than many people realize, especially compared to the U.S. economy, which continues to benefit from fiscal stimulus. 

David Rosenberg, founder and president of Rosenberg Research, told BNN Bloomberg that the Canadian economy is more “fragile” than the U.S. economy, adding that population growth has worked to make Canada’s economy appear to be performing better than it really is. 

“You can mask an erosion in the economy through unprecedented immigration and population growth. But (regarding) real per capita income and output, the Canadian economy on that basis already is in a recession,” Rosenberg said.

U.S. stimulus

The main difference between the two countries’ economies, according to Rosenberg, is that the U.S. is benefiting from “monumental fiscal stimulus” stemming from the Chips Act, which was introduced in 2022 to enhance semiconductor manufacturing, research and development. 

He said much of the economic growth in the U.S. last year came from fiscal stimulus. Gross domestic product in the U.S. grew by 2.5 per cent in 2023. 

While the U.S. has a large and closed economy, Canada’s by contrast is small and open, according to Rosenberg. As a result, he said the Canadian economy is more impacted by international events which will have a “big impact on Canada because we’re three times more sensitive to the global economy than the U.S.” 

Specifically, Rosenberg pointed to “flattening” economic data from the European Union and deflation in the Chinese economy.