Canada: Growth gap versus United States seen widening – NBC

National Bank of Canada (NBC) economist Taylor Schleich highlights that since 2022, U.S. real GDP growth have outpaced Canada. The report attributes Canada’s underperformance to weaker consumption, exports and especially business investment, and notes that consensus expects the U.S. growth advantage to widen further in 2026 despite stronger Canadian government spending.

Canadian economy lags U.S. on growth

"The national accounts published last Friday confirm that the U.S. economy outpaced Canada’s in 2025. This was the third straight year of U.S. outperformance and the seventh in the last eight."

"What’s driven lagging Canadian GDP growth over the last few years? The more appropriate question may be: what hasn’t? Canadian household consumption has trailed by ~3% cumulatively, and export growth has lagged by a similar margin. "

"The most pronounced gap, however, is on business investment. This grew more than 10% in the U.S. since 2022 but didn’t budge in Canada. Even here, relatively comparable residential investment performance obscures more alarming softness: Non-housing, private sector business investment in Canada has lagged the U.S. by more than 13%. And with persistent trade uncertainty looming over Canadian businesses, it’s hard to envision this gap narrowing much. "

"Canadian government spending is set to grow further in 2026, but that won’t be nearly sufficient to give Canada the overall GDP edge. Instead, with an engaged private sector and a stronger public sector impulse (via the OBBB), the U.S. growth advantage is seen widening this year. Alas, here’s hoping 2027 will be Canada’s year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)