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United States vs. Canada

Economy

United StatesCanada
Economy - overview

The US has the most technologically powerful economy in the world, with a per capita GDP of $59,500. US firms are at or near the forefront in technological advances, especially in computers, pharmaceuticals, and medical, aerospace, and military equipment; however, their advantage has narrowed since the end of World War II. Based on a comparison of GDP measured at purchasing power parity conversion rates, the US economy in 2014, having stood as the largest in the world for more than a century, slipped into second place behind China, which has more than tripled the US growth rate for each year of the past four decades.

In the US, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products. At the same time, businesses face higher barriers to enter their rivals' home markets than foreign firms face entering US markets.

Long-term problems for the US include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, energy shortages, and sizable current account and budget deficits.

The onrush of technology has been a driving factor in the gradual development of a "two-tier" labor market in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. But the globalization of trade, and especially the rise of low-wage producers such as China, has put additional downward pressure on wages and upward pressure on the return to capital. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income.

Imported oil accounts for more than 50% of US consumption and oil has a major impact on the overall health of the economy. Crude oil prices doubled between 2001 and 2006, the year home prices peaked; higher gasoline prices ate into consumers' budgets and many individuals fell behind in their mortgage payments. Oil prices climbed another 50% between 2006 and 2008, and bank foreclosures more than doubled in the same period. Besides dampening the housing market, soaring oil prices caused a drop in the value of the dollar and a deterioration in the US merchandise trade deficit, which peaked at $840 billion in 2008. Because the US economy is energy-intensive, falling oil prices since 2013 have alleviated many of the problems the earlier increases had created.

The sub-prime mortgage crisis, falling home prices, investment bank failures, tight credit, and the global economic downturn pushed the US into a recession by mid-2008. GDP contracted until the third quarter of 2009, the deepest and longest downturn since the Great Depression. To help stabilize financial markets, the US Congress established a $700 billion Troubled Asset Relief Program in October 2008. The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009, Congress passed and former President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP. In 2012, the Federal Government reduced the growth of spending and the deficit shrank to 7.6% of GDP. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries.

Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through FY 2018, the direct costs of the wars will have totaled more than $1.9 trillion, according to US Government figures.

In March 2010, former President OBAMA signed into law the Patient Protection and Affordable Care Act (ACA), a health insurance reform that was designed to extend coverage to an additional 32 million Americans by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on healthcare - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010.

In July 2010, the former president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are "too big to fail," and improving accountability and transparency in the financial system - in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight.

The Federal Reserve Board (Fed) announced plans in December 2012 to purchase $85 billion per month of mortgage-backed and Treasury securities in an effort to hold down long-term interest rates, and to keep short-term rates near zero until unemployment dropped below 6.5% or inflation rose above 2.5%. The Fed ended its purchases during the summer of 2014, after the unemployment rate dropped to 6.2%, inflation stood at 1.7%, and public debt fell below 74% of GDP. In December 2015, the Fed raised its target for the benchmark federal funds rate by 0.25%, the first increase since the recession began. With continued low growth, the Fed opted to raise rates several times since then, and in December 2017, the target rate stood at 1.5%.

In December 2017, Congress passed and President Donald TRUMP signed the Tax Cuts and Jobs Act, which, among its various provisions, reduces the corporate tax rate from 35% to 21%; lowers the individual tax rate for those with the highest incomes from 39.6% to 37%, and by lesser percentages for those at lower income levels; changes many deductions and credits used to calculate taxable income; and eliminates in 2019 the penalty imposed on taxpayers who do not obtain the minimum amount of health insurance required under the ACA. The new taxes took effect on 1 January 2018; the tax cut for corporations are permanent, but those for individuals are scheduled to expire after 2025. The Joint Committee on Taxation (JCT) under the Congressional Budget Office estimates that the new law will reduce tax revenues and increase the federal deficit by about $1.45 trillion over the 2018-2027 period. This amount would decline if economic growth were to exceed the JCT’s estimate.

Canada resembles the US in its market-oriented economic system, pattern of production, and high living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. Canada has a large oil and natural gas sector with the majority of crude oil production derived from oil sands in the western provinces, especially Alberta. Canada now ranks third in the world in proved oil reserves behind Venezuela and Saudi Arabia and is the world’s seventh-largest oil producer.

TThe 1989 Canada-US Free Trade Agreement and the 1994 North American Free Trade Agreement (which includes Mexico) dramatically increased trade and economic integration between the US and Canada. Canada and the US enjoy the world’s most comprehensive bilateral trade and investment relationship, with goods and services trade totaling more than $680 billion in 2017, and two-way investment stocks of more than $800 billion. Over three-fourths of Canada’s merchandise exports are destined for the US each year. Canada is the largest foreign supplier of energy to the US, including oil, natural gas, and electric power, and a top source of US uranium imports.

Given its abundant natural resources, highly skilled labor force, and modern capital stock, Canada enjoyed solid economic growth from 1993 through 2007. The global economic crisis of 2007-08 moved the Canadian economy into sharp recession by late 2008, and Ottawa posted its first fiscal deficit in 2009 after 12 years of surplus. Canada's major banks emerged from the financial crisis of 2008-09 among the strongest in the world, owing to the financial sector's tradition of conservative lending practices and strong capitalization. Canada’s economy posted strong growth in 2017 at 3%, but most analysts are projecting Canada’s economic growth will drop back closer to 2% in 2018.

GDP (purchasing power parity)
$19.49 trillion (2017 est.)
$19.06 trillion (2016 est.)
$18.77 trillion (2015 est.)

note: data are in 2017 dollars

$1.774 trillion (2017 est.)
$1.721 trillion (2016 est.)
$1.697 trillion (2015 est.)

note: data are in 2017 dollars

GDP - real growth rate
2.16% (2019 est.)
3% (2018 est.)
2.33% (2017 est.)
1.66% (2019 est.)
2.02% (2018 est.)
3.17% (2017 est.)
GDP - per capita (PPP)
$59,800 (2017 est.)
$58,900 (2016 est.)
$58,400 (2015 est.)

note: data are in 2017 dollars

$48,400 (2017 est.)
$47,500 (2016 est.)
$47,400 (2015 est.)

note: data are in 2017 dollars

GDP - composition by sector
agriculture: 0.9% (2017 est.)
industry: 19.1% (2017 est.)
services: 80% (2017 est.)
agriculture: 1.6% (2017 est.)
industry: 28.2% (2017 est.)
services: 70.2% (2017 est.)
Population below poverty line
15.1% (2010 est.)
9.4% (2008 est.)

note: this figure is the Low Income Cut-Off, a calculation that results in higher figures than found in many comparable economies; Canada does not have an official poverty line

Household income or consumption by percentage share
lowest 10%: 2%
highest 10%: 30% (2007 est.)
lowest 10%: 2.6%
highest 10%: 24.8% (2000)
Inflation rate (consumer prices)
2.1% (2017 est.)
1.3% (2016 est.)
1.6% (2017 est.)
1.4% (2016 est.)
Labor force
35.412 million (2020 est.)

note: includes unemployed

18.136 million (2020 est.)
Labor force - by occupation
agriculture: 0.7% (2009)
industry: 20.3% (2009)
services: 37.3% (2009)
industry and services: 24.2% (2009)
manufacturing: 17.6% (2009)
farming, forestry, and fishing: 0.7% (2009)
manufacturing, extraction, transportation, and crafts: 20.3% (2009)
managerial, professional, and technical: 37.3% (2009)
sales and office: 24.2% (2009)
other services: 17.6% (2009)

note: figures exclude the unemployed

agriculture: 2%
industry: 13%
services: 6%
industry and services: 76%
manufacturing: 3% (2006 est.)
Unemployment rate
3.89% (2018 est.)
4.4% (2017 est.)
5.67% (2019 est.)
5.83% (2018 est.)
Distribution of family income - Gini index
45 (2007)
40.8 (1997)
32.1 (2005)
31.5 (1994)
Budget
revenues: 3.315 trillion (2017 est.)
expenditures: 3.981 trillion (2017 est.)

note: revenues exclude social contributions of approximately $1.0 trillion; expenditures exclude social benefits of approximately $2.3 trillion

revenues: 649.6 billion (2017 est.)
expenditures: 665.7 billion (2017 est.)
Industries
highly diversified, world leading, high-technology innovator, second-largest industrial output in the world; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining
transportation equipment, chemicals, processed and unprocessed minerals, food products, wood and paper products, fish products, petroleum, natural gas
Industrial production growth rate
2.3% (2017 est.)
4.9% (2017 est.)
Agriculture - products
wheat, corn, other grains, fruits, vegetables, cotton; beef, pork, poultry, dairy products; fish; forest products
wheat, barley, oilseed, tobacco, fruits, vegetables; dairy products; fish; forest products
Exports
$1.553 trillion (2017 est.)
$1.456 trillion (2016 est.)
$423.5 billion (2017 est.)
$393.5 billion (2016 est.)
Exports - commodities
agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2008 est.)
motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum
Exports - partners
Canada 18.3%, Mexico 15.7%, China 8.4%, Japan 4.4% (2017)
US 76.4%, China 4.3% (2017)
Imports
$2.361 trillion (2017 est.)
$2.208 trillion (2016 est.)
$442.1 billion (2017 est.)
$413.4 billion (2016 est.)
Imports - commodities
agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys) (2008 est.)
machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods
Imports - partners
China 21.6%, Mexico 13.4%, Canada 12.8%, Japan 5.8%, Germany 5% (2017)
US 51.5%, China 12.6%, Mexico 6.3% (2017)
Debt - external
$17.91 trillion (31 March 2016 est.)
$17.85 trillion (31 March 2015 est.)
note: approximately 4/5ths of US external debt is denominated in US dollars; foreign lenders have been willing to hold US dollar denominated debt instruments because they view the dollar as the world's reserve currency
$1.608 trillion (31 March 2016 est.)
$1.55 trillion (31 March 2015 est.)
Exchange rates
British pounds per US dollar: 0.7836 (2017 est.), 0.738 (2016 est.), 0.738 (2015 est.), 0.607 (2014 est), 0.6391 (2013 est.)
Canadian dollars per US dollar: 1, 1.308 (2017 est.), 1.3256 (2016 est.), 1.3256 (2015 est.), 1.2788 (2014 est.), 1.0298 (2013 est.)
Chinese yuan per US dollar: 1, 6.7588 (2017 est.), 6.6445 (2016 est.), 6.2275 (2015 est.), 6.1434 (2014 est.), 6.1958 (2013 est.)
euros per US dollar: 0.885 (2017 est.), 0.903 (2016 est.), 0.9214(2015 est.), 0.885 (2014 est.), 0.7634 (2013 est.)
Japanese yen per US dollar: 111.10 (2017 est.), 108.76 (2016 est.), 108.76 (2015 est.), 121.02 (2014 est.), 97.44 (2013 est.)
Canadian dollars (CAD) per US dollar -
1.308 (2017 est.)
1.3256 (2016 est.)
1.3256 (2015 est.)
1.2788 (2014 est.)
1.0298 (2013 est.)
Fiscal year
1 October - 30 September
1 April - 31 March
Public debt
78.8% of GDP (2017 est.)
81.2% of GDP (2016 est.)

note: data cover only what the United States Treasury denotes as "Debt Held by the Public," which includes all debt instruments issued by the Treasury that are owned by non-US Government entities; the data include Treasury debt held by foreign entities; the data exclude debt issued by individual US states, as well as intragovernmental debt; intragovernmental debt consists of Treasury borrowings from surpluses in the trusts for Federal Social Security, Federal Employees, Hospital and Supplemental Medical Insurance (Medicare), Disability and Unemployment, and several other smaller trusts; if data for intragovernment debt were added, "gross debt" would increase by about one-third of GDP

89.7% of GDP (2017 est.)
91.1% of GDP (2016 est.)

note: figures are for gross general government debt, as opposed to net federal debt; gross general government debt includes both intragovernmental debt and the debt of public entities at the sub-national level

Reserves of foreign exchange and gold
$123.3 billion (31 December 2017 est.)
$117.6 billion (31 December 2015 est.)
$86.68 billion (31 December 2017 est.)
$82.72 billion (31 December 2016 est.)
Current Account Balance
-$480.225 billion (2019 est.)
-$449.694 billion (2018 est.)
-$35.425 billion (2019 est.)
-$42.862 billion (2018 est.)
GDP (official exchange rate)
$19.49 trillion (2017 est.)
$1.653 trillion (2017 est.)
Stock of direct foreign investment - at home
$4.08 trillion (31 December 2017 est.)
$3.614 trillion (31 December 2016 est.)
$1.039 trillion (31 December 2017 est.)
$1.004 trillion (31 December 2016 est.)
Stock of direct foreign investment - abroad
$5.711 trillion (31 December 2017 est.)
$5.352 trillion (31 December 2016 est.)
$1.371 trillion (31 December 2017 est.)
$1.277 trillion (31 December 2016 est.)
Market value of publicly traded shares
$25.07 trillion (31 December 2015 est.)
$26.33 trillion (31 December 2014 est.)
$24.03 trillion (31 December 2013 est.)
$1.593 trillion (31 December 2015 est.)
$2.095 trillion (31 December 2014 est.)
$2.114 trillion (31 December 2013 est.)
Central bank discount rate
0.5% (31 December 2010)
0.5% (31 December 2009)
1% (31 December 2010)
0.25% (31 December 2009)
Commercial bank prime lending rate
4.1% (31 December 2017 est.)
3.51% (31 December 2016 est.)
3.2% (31 December 2017 est.)
2.7% (31 December 2016 est.)
Stock of domestic credit
$21.59 trillion (31 December 2017 est.)
$20.24 trillion (31 December 2016 est.)
$3.219 trillion (31 December 2017 est.)
$2.802 trillion (31 December 2016 est.)
Stock of narrow money
$3.512 trillion (31 December 2017 est.)
$3.251 trillion (31 December 2016 est.)
$748.9 billion (31 December 2017 est.)
$637.6 billion (31 December 2016 est.)
Stock of broad money
$3.512 trillion (31 December 2017 est.)
$3.251 trillion (31 December 2016 est.)
$748.9 billion (31 December 2017 est.)
$637.6 billion (31 December 2016 est.)
Taxes and other revenues
17% (of GDP) (2017 est.)

note: excludes contributions for social security and other programs; if social contributions were added, taxes and other revenues would amount to approximately 22% of GDP

39.3% (of GDP) (2017 est.)
Budget surplus (+) or deficit (-)
-3.4% (of GDP) (2017 est.)
-1% (of GDP) (2017 est.)
Unemployment, youth ages 15-24
total: 8.6%
male: 9.5%
female: 7.7% (2018 est.)
total: 11.1%
male: 12.5%
female: 9.6% (2018 est.)
GDP - composition, by end use
household consumption: 68.4% (2017 est.)
government consumption: 17.3% (2017 est.)
investment in fixed capital: 17.2% (2017 est.)
investment in inventories: 0.1% (2017 est.)
exports of goods and services: 12.1% (2017 est.)
imports of goods and services: -15% (2017 est.)
household consumption: 57.8% (2017 est.)
government consumption: 20.8% (2017 est.)
investment in fixed capital: 23% (2017 est.)
investment in inventories: 0.7% (2017 est.)
exports of goods and services: 30.9% (2017 est.)
imports of goods and services: -33.2% (2017 est.)
Gross national saving
18.9% of GDP (2017 est.)
18.6% of GDP (2016 est.)
20.1% of GDP (2015 est.)
20.8% of GDP (2017 est.)
20% of GDP (2016 est.)
20.5% of GDP (2015 est.)

Source: CIA Factbook