Canada recorded its weakest economic performance during a prime minister’s first year in office in more than six decades, even as polling suggests many Canadians remain satisfied with Prime Minister Mark Carney’s handling of the economy.

According to reporting based on a Bloomberg News and Nanos Research survey, real gross domestic product contracted by about 0.05 per cent during Carney’s first year. It was the weakest first-year result for a Canadian prime minister since comparable records began in 1963.

Despite the decline, 60 per cent of respondents rated Carney’s economic management as good or very good, while 24 per cent rated it negatively.

Trade uncertainty with the United States has frequently been cited as a cause of the slowdown, but that explanation has limits. CUSMA remains in force and formal negotiations on a replacement agreement have not begun. Most Canada-U.S. trade continues to move tariff-free under the agreement, although steel, aluminum, automotive and other industries remain exposed to tariffs.

Business investment fell 0.7 per cent in the first quarter of 2026, marking a fifth consecutive quarterly decline. The weakness has extended beyond export-dependent industries, suggesting tariffs are only part of the problem.

High financing and construction costs, regulatory complexity, slow permitting, weak productivity and uncertainty over taxes and future demand have also discouraged investment. Consumer spending has weakened and the housing market has cooled.

Slower population growth has also been offered as an explanation, but permanent immigration remains historically high. Canada admitted about 483,600 permanent residents in 2024 and roughly 393,750 in 2025. Another 83,149 arrived during the first three months of 2026.

The larger reductions occurred among temporary residents, particularly foreign workers and international students. Ottawa reported 158,660 fewer new temporary workers during the first nine months of 2025 compared with the same period a year earlier.

Canada also experienced two consecutive quarters of contracting real GDP, commonly described as a technical recession.

Labour market conditions improved modestly in June, with unemployment falling to 6.5 per cent. However, the improvement came during one of the strongest seasonal hiring periods of the year, coinciding with FIFA World Cup matches in Canada, the Calgary Stampede and the summer tourism season. Temporary gains from major events and seasonal employment do not necessarily signal a broader economic turnaround. Economists will be looking for sustained private-sector job creation after the summer before concluding the labour market has materially improved.

The federal government has promoted major projects, infrastructure and foreign investment as the foundation of future growth. However, many projects referred to the Major Projects Office were proposed or under development before Carney became prime minister and have not yet reached final approval, financing or construction.

Carney’s international trips have also produced memorandums of understanding, strategic partnerships and commitments to further negotiations. Those agreements could eventually create investment and trade opportunities, but they are not the same as binding commercial contracts or money already invested in Canada.

Canada’s economy has shown some signs of stabilization, but its underlying problems remain unresolved. CUSMA uncertainty and slower population growth do not fully explain weak investment and declining output.

The government’s economic record will ultimately be judged by projects built, capital invested, productivity gains and improvements in Canadians’ living standards rather than proposals and non-binding agreements.