Economic Data Shows Canada and Europe Falling Behind as Prosperity Gap With U.S. Grows * The Gateway Pundit * by Antonio Graceffo

Europe also faces high energy costs, complex bureaucracy and a technology gap with the U.S. In Canada, population growth has outpaced both economic output and investment, which has also failed to cover depreciation. Aging populations and shrinking workforces add to these pressures.

A new Visual Capitalist ranking of every U.S. state and Canadian province by 2024 GDP per capita places Canada’s three largest provinces alongside Mississippi, the poorest U.S. state by that measure. Ontario ($53,849) and British Columbia ($54,986) edge out Mississippi ($53,621), while Quebec ($49,817) and all four Atlantic provinces fall below it.

Europe’s major economies are in the same range. Using IMF figures, Euronews found that Mississippi produced more per person than four of Europe’s five largest economies. Germany led Mississippi by about €1,500.

Canada and Europe have fallen further behind the United States over the past decade and a half. According to Visual Capitalist, Canada’s GDP per capita tracked closely with the U.S. through the early 2010s, but slower productivity growth has since widened the gap.

C.D. Howe Institute data shows that since the second quarter of 2022, Canada’s real GDP per capita has dropped about 1.4 percent, even as total real GDP grew by more than 5 percent. The economy got bigger while the average Canadian’s share shrank. The Centre for the Study of Living Standards links the decline to a sharp rise in the number of non-permanent residents over the same period. In other words, migrants are taking advantage of Canada’s generous social system and absorbing taxpayer money in the form of benefits.

Europe shows a similar decline relative to the U.S. An analysis by France’s OFCE research institute finds that the GDP per capita gap between the U.S. and the eurozone grew from 14 percent in 2008 to 25 percent in 2024. The gap in 2008 was roughly where it had stood since the euro’s creation. Since 2008, Germany and France each lost 11 percentage points relative to the U.S., the Netherlands 12, Spain 10, and Italy 16.

A Banque de France working paper reports that France’s gap with the U.S. widened from 24 percent to 33 percent. These figures are adjusted for inflation and purchasing power, so the gap cannot be attributed to exchange rates or cost-of-living differences.

The cause is productivity. The Banque de France paper finds that since 2000, the EU-US gap in hours worked per person has narrowed while the gap in output per hour has widened. Europeans are not working less relative to Americans. They are producing less per hour. Canada shows the same pattern.

In a March 2024 speech, Bank of Canada Senior Deputy Governor Carolyn Rogers said Canada produced 88 percent of the value the U.S. generated per hour in 1984, but only 71 percent by 2022. Among G7 nations, only Italy saw a larger decline relative to the U.S. over that period. Rogers called the situation an emergency, saying it was “time to break the glass.”

Rogers identified weak business investment as the clearest difference between Canada and its competitors, particularly investment in machinery, equipment and intellectual property. She noted that the capital spending gap per worker between Canadian and American firms has persisted for 50 years but worsened over the past decade. U.S. spending rose while Canadian investment fell below its level ten years earlier.

C.D. Howe data puts numbers to that decline. In 2008, Canadian firms invested $4,400 per worker in machinery and equipment, compared with $7,000 in the U.S., or 63 cents on the dollar. More recently, U.S. investment reached nearly $12,800 per worker, compared with $4,100 in Canada, or 32 cents on the dollar. New investment in Canada no longer covers depreciation and population growth, so the stock of capital per worker is shrinking.

The Fraser Institute reports that inflation-adjusted business investment per worker in Canada declined by an average of 2.3 percent annually after 2014, compared with annual growth of 2.8 percent from 2000 to 2014.

Rogers pointed to government-related obstacles behind the investment gap. She cited a Statistics Canada report linking declining competition to falling investment, and said companies are wary of regulatory approval processes that can be lengthy and unpredictable. She also noted that incentives and regulatory approaches can change from year to year, creating policy uncertainty.

Europe’s own officials have reached similar conclusions. The Draghi report, commissioned by the European Commission and published in September 2024, found that the productivity gap between the EU and the U.S. is largely explained by the technology sector, where Europe missed much of the digital revolution. The report also identified high energy prices and complex bureaucratic requirements as factors that discourage investment and hold back industrial growth.

Germany, Europe’s largest economy, shows how deep the investment problem runs. According to KfW Research, using Destatis data, inflation-adjusted business investment fell 0.9 percent in 2025, leaving it about 8 percent below its 2019 level.

The decline is sharpest in the categories that drive productivity. A KfW analysis found that by late 2024, German investment in plant and equipment was about 9 percent below its 2019 level. Investment in intellectual property had grown 11.2 percent over the same period, compared with 36 percent in the U.S. Across the currency union, Eurostat figures show that the euro area’s business investment rate in the fourth quarter of 2025 was the lowest since 2015.

Germany’s investment decline cannot be explained by population growth spreading capital across more people. Destatis reports that Germany’s population fell by 110,000 in 2025 to 83.5 million, its first decline since 2020. Deaths exceeded births by 352,000, while net migration fell from 430,000 to 235,000.

Canada’s population has also begun shrinking. Statistics Canada estimated a decline of 103,504 people in the fourth quarter of 2025, marking the first back-to-back quarterly population declines on record. A further decline of 55,025 followed in the first quarter of 2026. In both quarters, deaths outnumbered births.

When a population shrinks, investment per person rises if total investment holds steady. Falling investment per person in a stagnant or shrinking population means total investment is contracting. For aging economies with shrinking workforces, more capital per worker is the main remaining source of growth, yet both Germany and Canada are moving in the opposite direction.

Taxes are another dividing line. OECD data shows that in 2024, total tax revenue, including social security contributions, equaled 25.6 percent of GDP in the U.S., compared with 34.9 percent in Canada, 34.4 percent in the UK, 38.0 percent in Germany, 42.8 percent in Italy and 43.5 percent in France. These economies collect roughly 9 to 18 more percentage points of GDP in taxes than the U.S.

Since 2010, when the prosperity gap widened, Canada’s tax burden rose 3.9 percentage points, Germany’s 2.8 and the UK’s 2.4, compared with 2.2 in the U.S. France and Italy, which already had the highest tax burdens in the group, recorded increases of 1.3 and 1.1 percentage points, respectively.

Americans complain that gas prices are high right now, but on average, they live much better than their European counterparts, who earn lower salaries, pay higher taxes and face standard VAT rates of up to 27 percent.