Canada vs U.S. Real GDP Growth (and Key Components) – Third Quarter 2006

Alex Carrick -- January 19, 2007

While real (inflation-adjusted) GDP growth in both the U.S. and Canada continued on a downward path in third-quarter 2006, the U.S. continued to perform relatively better than Canada (+2.2% quarter to quarter annualized versus +1.7%). Consumer spending held up better in Canada (+4.2%) than in the U.S. (+2.9%), but other factors came into play. The U.S. had much greater volatility in private investment. U.S. residential invesment fell -18.0% in the latest quarter versus Canada’s -8.2% decline. At the same time, however, non-residential investment in the U.S. recorded a +16.7% increase in the latest quarter, whereas Canada’s gain was only +4.7%. The U.S. also outperfomed Canada on the trade front with its growth in goods exports (+9.4%) exceeding good imports (+6.9%). In Canada, the opposite prevailed, as goods imports (+6.1%) grew faster than goods exports (+5.0%).