The economic mood in Alabama these days is looking up. Unemployment in the state, at 2.8%, is just a notch above its 50-year low, and the latest reading shows the state economy grew at an annualized rate of 3.4% in the second quarter, the 14th-fastest rate of growth of all 50 U.S. states.
And yet, few would consider Alabama’s to be a thriving economy. Quite the opposite. On a per-capita basis, Alabama’s economic output in 2023 was just US$58,775, near the bottom of the list. Only Arkansas, West Virginia and Mississippi—all also in the U.S. south—fared worse.
Which helps explain the panic north of the border about Canada’s atrociously weak living standards and productivity. When the per-capita GDP of the provinces are adjusted for purchasing power, or what a dollar will buy you in each country, Ontario is virtually indistinguishable from Alabama, based on an analysis of state and provincial economic data by Trevor Tombe, a professor of economics at the University of Calgary. Quebec, Manitoba and the Maritime provinces were all even lower.
It’s not just that Canadian provinces lag well behind the states but that the U.S. is pulling ahead faster. Based on Tombe’s analysis, real GDP per capita was 43% higher in the U.S. than in Canada, and this year he estimates the prosperity gap will widen to an unprecedented 50%. That gap has been widening since the 1980s, when it stood at around 10%, but the gulf has expanded significantly over the past decade, doubling since 2014, reflecting weak private-sector investment, and an economy that’s increasingly dependent on government spending and immigration to juice the numbers.
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