Economies of Scale

Who's doing better right now in terms of economic performance the United States or Canada?

If you watch enough American news the picture has been fairly gloomy as of late with talks of jobless recoveries and offshoring and what not. Even the tenure of current President George W. Bush is said to be threatened by the same economic problems that beset his father.

In Canada the economic news has been for the most part positive. We have avoided the American "recession" (technically the American economy never went into recession despite journalists anxiousness to use the word) and if you took a quick survey I am sure most Canadians would tell you that our economy is doing far better than our big neighbour to the south.

Numbers however don't lie.

Unemployment in Canada is currently at 7.3% compared to the U.S. where it 5.6% (when is the last time our unemployment figure was that good?). Ok you might ask but hasn't the U.S. employment picture improved recently? Yes it has, the 5.6% number is an improvement over 6% a year ago. So that makes us (Canada) look a little better right? Well actually our employment was 7.6% a year ago.

GDP numbers also give us a clue to the health of the economy. Canada's GDP is currently growing at an annualized rate of 2.4%. Our economically challenged neighbour to the south? 4.4%.

The sluggishness of our economy relative to our neighbour is getting little treatment in the press. Considering that we are currently in the midst of a Federal election campaign you would think there would be more discussion about that.

The health of the American economy generally bodes well for Canada. After all we sell 80% of the stuff we produce to the U.S. But if our economy is slowing down it will bode ill for the next government of Canada especially if a different party takes over.

Look for any economic malaise to be blamed on the newcomers rather than the old guard.

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