The Stock Market and Canadian Economic Performance

Glancing idly at the numbers, I find to my slight surprise that the Canadian stock market (S&P/TSX) is now down about 25% from the May, 2008 peak, whereas the US stock market (S&P 500) is down by only about 10% from its peak in May, 2007. So, since the beginning of the crisis, owners of  US corporations have done significantly better than owners of Canadian corporations.

I don’t want to argue that stock market performance is a very useful barometer of real economic performance. Still, this factoid is more than a little at odds with the conventional view that we are doing much better than the US, that our fundamentals are great, that resource dependency is a blessing and not a curse etc etc.


  • Time does not stand still–your calculations need to be adjusted for inflation. A rough calculation suggests that the US market has lost about 20% of its value, and the TSX close to 30%. Neither has performed well.

  • The US is nominally doing great, leading wealth to the top%1, as inflation clearly has benefited them over everyone else. Income Inequality is not being caused by a decrease in the general price level of goods and services. Its being caused by rising prices without wages which are concentrating wealth to the few hands as Donald Trump. The short sighted view on aggregate demand, is leading to distortions in prices & wages we have not seen since the 70s.

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