The Canadian Political Situation Explained in 5 Charts

After spending the holidays assessing his options, Justin Trudeau announced his resignation as Prime Minister of Canada on January 6th. The resignation will come into effect at the conclusion of the Liberal leadership race and will mark the end of Trudeau’s nearly ten years in power. In that time, Trudeau’s Liberals have fallen from 40% of the popular vote in the 2015 election, to 33% in both the 2019 and 2021 elections, to roughly 20% support in current polls.

How do you explain this precipitous fall in support? Newspaper columnists have lots of opinions. So does that guy on Twitter who’s still talking about COVID boosters. Rather than turning this into a political debate, or a discussion about leadership qualities, or the dangers of unchecked ego, the following five charts might explain a lot of it.

1. Real GDP per capita: Canada vs. the U.S. (Q1 2016 – Q4 2023)

Trudeau took office on November 4, 2015. Since that time, the Canadian economy is roughly flat on a per-person basis, while the U.S. economy is ~16% bigger per person over the same time frame. Canada also lags behind its OECD peers on this same metric during Trudeau’s tenure. Not growing the economy on a per-capita basis over the course of nine years in power is a hard economic record for any politician to run on.

So, if GDP per capita isn’t growing, where is our economic growth coming from? Record population inflows help explain most of it.

2. Fastest growing countries in the World (Q3 2023 – Annualized)¹

Canada’s population grew by 430,635 (or 1.1%) in the three months between July 1, 2023 and September 30, 2023. That is about as many people that live in the city of Halifax, Nova Scotia. Almost all of this growth (96%) was attributable to international migration, and 73% of it was comprised of non-permanent residents.

Andrew Sarna at Forthlane Partners posted the above chart that annualized this quarterly population growth rate and compared it to the fastest growing countries in the World at that time. As you can see, Canada ranks 3rd globally at a 4.4% growth rate, and is the only developed country, and the only country outside of Africa and the Middle East in the top 5.

But what happens when you grow your population through immigration at a faster rate than it has grown in 70 years? You put pressure on the longtime Canadian consensus on immigration.‍

3. Support for Immigration in Canada (1977-2024)²

Canada has largely been built on immigration and support for multiculturalism. As you can see in the above chart, there had been a broad consensus on Canadian immigration policy over the last quarter century. 2024 marked the first year since the turn of the millennium that a majority of Canadians agreed with the statement that, ‘Overall there is too much immigration in Canada’.

As the Liberal party focused on rapid population growth primarily through non-permanent residents settling in some of Canada’s largest cities, the consensus on Canadian immigration broke. At the same time, population growth proved to be an easy target to blame for a historically hot Canadian housing market.

4. Canada MLS Home Price Index, Single-Family Benchmark (2008-2024)

By the time Trudeau took power in late 2015, Canadian house prices had already experienced a significant run-up from the bottom experienced in the depths of the Global Financial Crisis in 2009. However, it’s really only in the last 10 years that a massive gap has opened up between house prices and household incomes and per capita economic growth. As you can see in the above chart, the average Canadian single-family home went from ~$475K in late 2015 to ~$950K at the peak of the market in late 2022. Prices have since fallen from that peak, but the damage from a sentiment perspective remains.

In addition to the domestic challenges in Canada as seen in the four charts above, Trudeau also faced an uphill battle shared by incumbent governments across the world.

5. Rise/fall in vote share for governing parties in national elections (% pts) by year

For the first time in recorded history, every incumbent party who held an election in a developed country in 2024 lost vote share compared to their previous election result. Although the Canadian election won’t be held until later this year, it looks likely to follow this trend when it happens.

Many explanations have been offered for the cause of this disillusionment with those in power- from anger about inflation and the wealth gap to the negativity bias associated with social media. It’s probably a combination of multiple factors, but it’s always worth noting when something that has never happened in 100+ years of global democracy happens for the first time.

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