Government subsidizes the housing and banking industries by price fixing the cost of credit. Direct and indirect employment is disproportionately funneled into construction (see Labour Force Participation post).
The same story has been repeated globally and according to BMO chief economist Douglas Porter "Canada's rising dependence on commodities trade makes it vulnerable to price declines."
Canadians do not appear to be willing to add value to their resources by developing infrastructure and manufacturing capacity.
In the mashup above, the two top charts are from SoberLook.com and they observe:
With prices drifting steadily lower since the spring of 2011, it seems safe to conclude that commodities are not going to bail us out this time—the Super Cycle is over. While global growth will likely be just firm enough to put a floor under resource prices in 2014, Canada simply cannot rely on improving terms of trade to lift incomes further, or to turn around a weak trade performance. The dramatic rise in U.S. oil and gas production further complicates the picture by putting downward pressure on North American energy prices.
Here is what's driving this dependence on commodities exports.
Canada continues to struggle with lagging labor productivity. Anecdotal evidence suggests that businesses are avoiding opening labor-intensive operations in Canada due to high costs. As a result, manufacturing employment and output failed to grow over the past decade - and in fact have been declining. Without growth in manufacturing, Canada has been increasingly dependent on natural resources for growth... the non-energy component of Canada's trade has declined sharply over the past decade.