Recent trends in spending and savings in Canada and the US

Author

F. Roy

Organization

Statistics Canada

Published

2003

Summary

For a number of years, our economy has grown more vigorously than that of the United States, with the gap widening recently for a range of indicators– from aggregate demand to the labour market. Real GDP per capita has grown more in Canada in the last
five years, reflecting both faster gains in GDP here and more rapid population growth in the US. For the first time in two decades, a larger percentage of Canadians than Americans held a job. Our unemployment rate remained higher, as a greater proportion of our working-age population was in the labour force than in the US.

This note focuses on differences in the spending
and financial behaviour of the four major sectors of
these two economies: households, government, business and external. The goal is to highlight some of the reasons for our improved performance by tracing their
origin back to recent structural differences between
these sectors, not to offer an exhaustive list of all the
factors contributing to this gap. Briefly, this paper shows
that spending in all non-government sectors has
recently been stronger in Canada than in the US. Moreover, the public, corporate and external sectors are all running financial surpluses in Canada, while these sectors are all in deficit in the US. The counterpart of large current account surpluses in Canada and deficits in the US is large net borrowing by non-residents from Canada and lending to the US.

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Source: Consumer Policy Research Database