[ CYPHER CODE #1116 ]
Assuming you’re ahead is the fastest way to get passed.

[ CYPHER CODE #1117 ]
The real risk isn’t decline. It’s denial.

[ CYPHER CODE #1118 ]
Investment goes where it’s wanted, not where it’s nostalgic.

BRIEFING

Grant here. For a little while now, Canadians have sort of held this strange assumption that their economy operated in a superior league of its own. Basically, Canada has a so-called reputation as a stable, high-performing G7 economy. But this belief bred comfort and complacency, leading the Canadian economy to focus more so on maintaining the status quo while others pass them by. Most notably, Alabama, which has the stereotype of being economically "backward," but when you look at the numbers, they tell a completely different story. Let’s break it down.

What's triggering all this is a recent economic study that ran the cross-border comparisons, and the result landed in a way few Canadians were prepared for.

SOURCE

For eons, Canadians have viewed Alabama as a small state that, save for a few pockets, is dirt poor. All anybody seems to know about Alabama is that Montgomery and Birmingham were the centre of the civil rights movement. In 1963, when Martin Luther King Jr. wrote his “Letter from a Birmingham Jail,” he called Birmingham “probably the most thoroughly segregated city in the United States.”

So, it was a shock when Canadian economist Trevor Tombe and the International Monetary Fund ran the numbers in 2023 and 2024 and concluded that Canada had, in fact, become poorer than Alabama.

But in December, Huntsville had the last laugh. Eli Lilly and Co. was looking to build a US$6-billion manufacturing plant that would create 3,000 construction jobs and employ 450 engineers, scientists, lab technicians and operations staff. After narrowing down the field of 300 bidders, the pharmaceutical giant named Huntsville a winner, one of four new facilities in the U.S. It’s the state’s largest-ever private industrial investment, and it personifies the tagline the Mayor has preached: “Huntsville: a smart place.”

But being on the ground in Alabama, it was obvious that Canadians need a wake-up call. They tend to view the economy through a historical lens – this is a G7 country that has long punched above its weight. Yet capital is global now and competition for it is fierce. If Canada isn’t careful, places such as the Deep South will continue to steal jobs. The Eli Lilly plant awarded in December could have just as easily gone to Montreal, a pharmaceutical hub.

As for the second component in the GDP per capita calculation – population – Canada’s soared by two million people in 2023 and 2024. That’s much faster than the equivalent U.S. growth rate on a percentage basis. It takes time for all these newcomers to start materially boosting GDP and offset their drag on the per capita number.

DEBRIEFING