As Canadians continue to struggle with the cost of living fueled by high interest rates and inflation, Canada is also seeing one of the worst declines in living standards in 40 years, according to a new study.

The Fraser Institute released a paper titled "Changes in Per-Person GDP (Income): 1985 to 2023" on Friday.

The study examines the changes in quarterly per-person GDP adjusted for inflation between 1985 and the end of 2023. It assesses the length, the percentage decline, and how much time it took to recover income lost during the periods of decline.

According to the study, Canada went through nine periods of decline and recovery in real GDP per person between 1985 and 2023.

Within those nine periods, three stuck out as the most severe: Q2 1989 to Q3 1994, Q3 2008 to Q4 2011, and Q2 2019 to Q2 2022.

However, the Q2 2019 to Q2 2022 period is "unlike any other decline and recovery since 1985" notes the study.

Fraser Institute

That's because even though GDP recovered for one quarter in Q2 2022, it declined again, and in Q4 of 2023, GDP was still below the level of Q2 in 2019.

Looking at the period between April 2019 and the end of 2023, the study notes that inflation-adjusted GDP — which is considered a "broad measure" of the standard of living — dropped by 3 per cent from $59,905 to $58,111.

There are only two periods of decline — 1989 to 1992 (-5.3 per cent) and 2008 to 2009 (-5.5 per cent) — that surpassed 2019 to 2023.

The fact that Canada hasn't seen any "meaningful recovery" during this time is a troubling sign, notes the study.

Jason Clemons, study co-author and executive vice president at the Fraser Institute, noted that this decline shouldn't be taken lightly.

"The severity of the decline in living standards should be a wake-up call for policymakers across Canada to immediately enact fundamental policy reforms to help spur economic growth and productivity," stated Clemons in a release.

The report added that this latest decline has lasted 18 fiscal quarters, making it the second-longest in the last four decades.

If it's not stabilized, the decline could be the "longest and deepest" in per-person GDP Canada has seen in the last 40 years.