Canada’s Economy Flatlines as Exports Prop Up Q1 Growth

Despite modest GDP gains, weak domestic demand, falling investment, and shrinking household savings reveal deeper economic vulnerabilities.

You probably didn’t wake up this morning wondering what Canada’s GDP was doing. But you should have. Because if you want to understand where this country is headed—economically, politically, and culturally—there’s no better window than the nation’s books. And Statistics Canada just opened that window for Q1 2025.

Now, according to the official report, Canada’s economy grew by 0.5% last quarter. That sounds fine, maybe even good, until you realize it’s exactly the same tepid pace as the quarter before. Zero acceleration. Flatline. In fact, final domestic demand—the core of any real economy—posted no growth at all. None. That's the first time we’ve seen a complete stall since late 2023. So what’s happening?

Well, the raw number is up. GDP increased. But here’s the kicker: that “growth” didn’t come from a bustling, confident consumer market or a vibrant domestic business climate. It came from exports—stuff we sent abroad. Specifically? Cars and heavy machinery. Passenger vehicle exports jumped a staggering 16.7%. Industrial machinery surged by 12.0%.

But why? Did Canada suddenly get more productive? No. It’s because American tariffs are looming. Businesses on both sides of the border are rushing to get ahead of higher costs. In other words, we're gaming the clock, not building prosperity. And even that export high came with a warning label: crude oil and refined petroleum exports actually declined. The energy sector—the very engine of Canadian wealth—contracted in the same quarter we’re told the economy "grew."

Meanwhile, imports also rose—1.1%—as Canadian companies scrambled to buy now, before the tariffs hit. That’s not long-term growth. That’s panic buying. It’s hoarding disguised as economic policy.

Dig deeper, and the picture gets worse. Household spending? Up just 0.3%, which is a nosedive from the previous quarter’s 1.2%. Per capita, consumption rose by a measly 0.1%. What are people spending money on? Rent and banking fees. Not cars, not furniture, not consumer goods that indicate confidence. Just housing and financial services. Translation: people are stuck paying more to live and borrow, while cutting back on everything else. Is that your idea of a booming economy?

And if you’ve tried to buy or sell a house lately, this next part won’t surprise you. Residential investment fell 2.8%. The biggest driver? A collapse in resale activity—ownership transfer costs dropped 18.6%, the worst drop since 2022, back when interest rates were skyrocketing. The resale market is in free fall. But the Liberals won’t admit that. They’ll point to a tiny bump in new apartment construction, mostly in Ontario, and act like that’s victory. It’s not. It’s patchwork.

Even business investment is sputtering. Spending on non-residential structures dropped 1.6%, especially in oil and gas. Research and development? Down. Software investment? Down. The only thing up was machinery and equipment—up 5.3%—but even that wasn’t organic growth. It was driven by—you guessed it—imports. Importing more tractors doesn’t mean we’re getting richer. It means we’re importing more tractors.

Compensation of employees did rise—0.8% overall—but that too was uneven. Most of the wage growth came from government-backed sectors like healthcare, where retroactive payments in Quebec drove up the numbers. Real economy sectors? Retail, wholesale, manufacturing? All saw declines. And which provinces led wage growth? Saskatchewan, Alberta, and British Columbia—regions less entangled in Liberal policy and more connected to actual productivity. The West, once again, is doing the heavy lifting.

Now, let’s talk savings. You’re probably saving less. The household saving rate dropped to 5.7%, the lowest level in a year. Why? Because disposable income only grew by 0.8%, while your expenses rose faster—1.0% in nominal terms. Interest income fell off a cliff. Down nearly 4% on deposits and securities. Foreign investment income? Down even more. Sure, dividends rose, but only domestically—and only modestly.

The only people really pulling ahead? Banks. Corporate operating surpluses rose 1.4%, thanks to oil and gas, motor vehicles, and the banking sector. But most service industries—the ones where actual people work—saw weaker returns. The story here is very simple: capital is consolidating at the top, and ordinary families are getting squeezed. Again.

And looming over all of this? The United States. In 2021, over half of Canadian machinery and equipment investment relied on U.S. imports. That number hasn’t changed much. We are still deeply dependent on a trading partner that is now actively slapping tariffs on us. We are vulnerable, and the Liberal government has done nothing to prepare for it.

But don’t worry, say the bureaucrats. This report contributes to the United Nations' 2030 Sustainable Development Goals. Yes, really. The same government that’s taxing your heat and collapsing your housing market is cheering itself on for meeting abstract global benchmarks. You may not be able to afford a mortgage or a vacation, but you can rest easy knowing Mark Carney is very pleased with your carbon footprint.

In conclusion: the numbers might show growth, but the story is decay. Our exports are ticking up because of fear. Our consumers are pulling back. Our businesses are losing faith. Investment is hollowed out. Wages are rising only where government steps in. And real Canadians—working families, small business owners, young homebuyers—are being left behind.

The swamp might have a new face, but the agenda hasn’t changed. This is the economic legacy of the Trudeau years—mismanagement, dependence, and decline—now handed off to a global banker with a carbon tax fetish. Welcome to Canada in 2025.