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Parallels in GDP: Canada and the USA

The graph above can be used to compare the percent change in Gross Domestic Product in the United States and Canada. The United States is represented by the red line and Canada is represented by the blue line.

The percentage change in GDP for the United States and Canada shows that the nations’ GDP’s are generally correlated as the business cycles show the same shape for peaks and troughs. All major changes in the Gross Domestic Product in the United States are mirrored by that of Canada as they share a similar market structure. The United States tends to have a larger percent change of GDP. For example, during the Great Recession in 2009, the United States GDP troughs at -2.04%  while Canada troughs at -2.77%. This time marks the first occurance when both of the countries have a negative percent changes and the closest the countries come to having the same percent change of GDP between 1961 and 2011.

It is also important to note the other major troughs during this time period occuring in 1982 and 1991. Unlike the 2009 trough, only the Canadian percent change reaches a negative number during this year.

“Real Gross Domestic Product in Canada.” FRED, fred.stlouisfed.org/graph/?g=hz1x#0.

The graph above can be used to compare the percent change in Real Gross Domestic Product in the United States and Canada. The United States is represented by the red line and Canada is represented by blue line.

The real GDP of the United States and Canada generally follow the same trends, but the peaks and trough are not correlated as closely in comparison to GDP. For example, both countries experience an extreme decline in 1982, 1991, and 2009, as is shown by the GDP and real GDP graphs. However, there are smaller influxes in the real GDP that are not reflected in both countries. There is a decrease in real GDP of the United States from 1992 to 1993, while there is an increase in real GDP for Canadian during this period of time.

It is important to note that there are intersections of the countries’ real GDP’s, while there are none for the GDP’s of the countries because Real GDP is calculated as if prices remain constant.

The Canadian economy seems to be more volatile, with the greater percentage changes in Real GDP in comparison to the US. Because the United States has a larger economy, the graph does not depict such exaggerated business cycles; however, the GDP in Canada does seem to move in parallel to GDP in the United States. Individual choices have less of an impact on overall economic status in the US because each consumer is a smaller fraction of the population proportion in comparison to the Canadian GDP. For example, when the Canadian GDP noticeably dipped in 1982, the United States GDP continued on with consistent exponential growth. Generally, Canadian Real GDP has higher peaks and lower troughs than US Real GDP. At a relative peak in 1962, US Real GDP is +6.11% and the Canadian Real GDP is +6.99%. At a relative trough in 1991, US Real GDP is -.07% and Canadian Real GDP is -2.09%  There are some exceptions, like in 1984 when the US Real GDP is +7.25% and the Canadian Real GDP is +5.81%.

12 thoughts on “Parallels in GDP: Canada and the USA

  1. bearupk20

    This is a very interesting post. I personally do not know much about Canada's economy, so this post was very informative, in that their economy, for the most part, runs parallel to the United States'. I think its very interesting to see how two countries with different economies can be so closely related and experience the same changes at the same time, even though Canada's economy is not as large as the U.S.'s. It goes to show how interconnected the global economy, and how interdependent it is.

    Reply
    1. radcliffec20

      Katie, I really like how you addressed the interconnected natural of the global economy. I wonder if there is any country whose trend in GDP contradicts with the United States (or any other country for that matter), or if all countries have generally parallel GDP trends.

      Reply
    2. Jimmie Johnson III

      Same! I feel like Canada is always overlooked on the global scene, often overlooked for being a shadow to the US. I think this was very informative to see how even though their economy is smaller and they specialize in different things, it is very similar to the U.S.

      Reply
  2. clintong20

    This is extremely interesting as I never truly knew how connected the world economies of the U.S and Canada are. One thing in particular that stuck out to me was the recession trough in 2009. The economies were basically exactly the same! Amazing.

    Reply
  3. Cade Hornak

    Interesting post! The parallels between the two countries remind me of the Levinson book. He explains how all major wealthy nations experienced the economic slump despite the differences and diversities between these countries. We really do exist in a global economy.

    Reply
  4. laytonr20

    I too found this a very good example of how interconnected the world's (and especially the west's) economies are, and it is another good way to put the 2008 recession into perspective, showing that it wasn't solely the US that was hit hard, other western countries were as well.

    Reply
  5. longa20

    I like how you not only compared and contrasted the two nation's GDPs, but also provided reasoning. It will be interesting to see if Canada continues to be volatile in the future.

    Reply
  6. Jack Ware

    This post did a great job depicting the the parallels between the U.S and Canadian GDP's. It leads to interesting questions about the global economy and its interconnectedness. In today's society the parallels make even more sense given the rise of technology and communication that allow nations to interact. I would assume that such advances strengthen the parallels you observed. I wonder in the past whether such connections were weaker when technology and communication between nations were not as ingrained within society.

    Reply
  7. moraifa19

    This was very interesting because as much as Canada is a part of America, they've always seemed vastly different from the U.S. and I would have expected this difference to be apparent in their GDP fluctuations and economies. However, this blog post instructed me otherwise as the reality is that they actually do mirror each other's peaks and troughs.

    Reply
  8. hallk20

    It would be really interesting to see the factors that go into the GDP and how each factor differs for either country. What causes neighbors to have such extreme back and forth between the strength of their economies? At least it is very clear that recessions affect every country, and it seems to have put both countries back onto an equal playing field where GDP was almost the same.

    Reply
  9. Lauren Fredericks

    This is an extremely interesting comparison. I did not expect Canada's percent change in GDP to be more volatile compared to the US', as it seems as though the US' more 'free-market'-centric economic system is often accused pf being very volatile and precarious.

    Reply

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