Posthaste: Alberta tops Canadian provinces for economic freedom, but tumbles in North American ranking

Alberta once again topped the chart as the most economically free Canadian province, but it slipped down in the

Fraser Institute’s ranking for North America. The think-tank’s annual Economic Freedom of North America report , which has been going for almost 30 years, measures the economic freedom of 10 Canadian provinces, 50 U.S. states, the U.S. territory of Puerto Rico and all 32 Mexican states.

The indices measure the degree to which provincial, state and local governments permit their citizens to make their own economic choices by looking at, among other things, government spending, taxes and labour market regulation.

“People have more economic freedom when they are allowed to make more of their own economic decisions — about what to buy, where and how to work and how to start and run businesses,” said the report.

New Hampshire is the top jurisdiction for economic freedom overall, followed by South Dakota and Idaho, which tied for second place, and Oklahoma and South Carolina, which tied for third.

Florida, home away from Washington home to U.S. President Donald Trump , ranks high in 7th place. Much further down the scale comes Alberta, the highest ranking Canadian province, tied for 30th with West Virginia. Last year the province tied for 12th place with Tennessee, South Dakota, Colorado and Texas.

British Columbia is the next highest Canadian province this year, in 47th place along with Rhode Island. Ontario ranked 49th along with New York State, which is the third lowest jurisdiction in the United States. The remaining seven provinces rank below the 50 U.S. states.

Newfoundland & Labrador is the lowest ranking province in North America, with Prince Edward Island, Nova Scotia and New Brunswick close behind.

The ranking within Canada alone shakes out a bit differently. Alberta is still in front as it has been for many years, though since 2014 that lead has shrunk. Its score of 6.44 (out of 10) is now less than a point ahead of Ontario at 5.67 points. New Brunswick, British Columbia and Manitoba are next in line, with Quebec in last place with a score of 3.10.

“High taxes, high levels of government spending and overly-burdensome regulations continue to depress economic freedom across much of Canada, which makes it harder for businesses to thrive and create jobs,” said Matthew Mitchell, a senior fellow at Fraser Institute and co-author of this year’s report.

Economic freedom has been declining in all three countries during this century, with big setbacks during the Great Recession in 2009 and the pandemic in 2020. Economic freedom is now lower in North America than it was in 2011, according to the report.

The Fraser Institute says that’s important because economic freedom translates into economic well-being, and regions with more freedom tend to prosper.

Of the North American jurisdictions in the bottom 25 per cent on the economic freedom scale income per person was US$3,510, while those in the top 25 per cent had incomes of US$66,367.

“In other words, incomes in the freest North American jurisdictions were 19 times higher than in the least-free jurisdictions,” said the Fraser Institute researchers.

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Mortgage originations have surged over the past six months, but it’s not because the housing market is gaining momentum, said Taylor Schleich, an economist with National Bank of Canada.

The volume of home sales is still only two-thirds of what it was in 2021. Instead the $300 billion in originations is driven by mortgage renewals. Back in 2020, September and October were the two highest months of 5-year fixed rate origination ever, he said, and those are coming due.

This time, however, homeowners are opting for shorter terms with the three-year span being the most popular.

“Going forward, lower rates may marginally help boost homebuying but a return to a 2021-style housing market is highly unlikely,” wrote Schleich.

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Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg.

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