North America (US and Canada)
North America has experienced steady economic growth over the past decade, with certain countries experiencing more growth than others. The United States and Canada have emerged as the frontrunners in this regard. The increased trade and investment between North American nations especially between the United States and Canada along with advancements in technology and innovation primarily in the United States and Canada have played a significant role, in driving economic growth across North America. The governments of these countries are actively working to boost production levels and expand their export sectors notably North America boasts the worlds GDP amounting to a staggering USD 33,729 billion.
The United States boasts the economy worldwide with a staggering GDP of over $19.5 trillion in 2017 making it the world’s largest economy. What sets the country apart is its economic landscape featuring a wide array of industries such as manufacturing, agriculture and services. Additionally, the United States stands at the forefront of advancements due to numerous companies leading the way in research and development. This unique blend of diversity and innovation has solidified America’s position as a global powerhouse in the international economy; its robust economy continues to experience growth. Currently (2023) US Real GDP stands at 22.48T – an increase from quarters 22.23T and a significant rise, from 21.85T one year ago.
- Over the few years, there has been a consistent decline in the unemployment rate in US reaching a record low of 3.5% in 2019. Additionally, we have witnessed an increase in the labor force participation rate indicating individuals entering or reentering the workforce. The growth of labour productivity has played a vital role in fueling the economic strength and prosperity of the United States since World War II. It has contributed an increase of 2.3% to economic growth and significantly supported a 1.8 percent annual rise in real incomes.
- While the labor market remains robust wage growth has been relatively moderate. However we are now observing an upturn in wages at a faster pace, which can be attributed to both a tightening labor market and historically low unemployment rates. In comparison to sectors wage growth in the United States was less pronounced over the past year; nevertheless this sector managed to create 5. 8 percent more jobs than, before the pandemic.
- Consumer expenditure plays a key role in driving economic growth in the United States contributing to the surprising 4.8% annualized growth rate witnessed in the third quarter of 2023. During this period personal consumption expenditures accounted for 69% of the country’s Gross Domestic Product (GDP). Recent trends indicate a shift towards consumers prioritizing experiences over material possessions resulting in increased expenditure on travel dining out and entertainment.
- In the United States, consumer spending represents 70% of GDP. In 2022 the average expenditure per American stood at USD 72,960. This marked a year over year increase of 9% from 2021. Therefore any fluctuations, in consumer spending can significantly impact the economy.
International Trade and FDI
- The United States ranks as the second largest global importer and the third largest global exporter of goods. In 2022 its exports were valued at over two trillion U.S. Dollars. The top five destinations for exports are Canada, Mexico, China, Japan and the United Kingdom. International trade greatly influences the U.S. Economy with imports and exports playing a role in GDP.
- The U.S. has established trade agreements with other nations like the North American Free Trade Agreement (NAFTA) and the Trans Pacific Partnership (TPP). These agreements have effects on trade and economic growth.
- The US has had a trade deficit for many years, which means it imports more goods than it exports. In 2019, this deficit amounted to over $570 billion in goods and services worldwide. This economic situation can have both negative impacts depending on various factors driving it.
- Foreign direct investment in the United States witnessed an increase, from $5.04 trillion at the end of 2021 to $5.25 trillion by the end of 2022. The rise primarily indicated a growth of $142.2 billion, in the region with significant contributions coming from the United Kingdom and Germany.
Government Spending and Fiscal Policy
- Government spending is a major driver for economic growth within the United States. In 2023 the government allocated $6.13 trillion. This spending encompasses areas such as defense, infrastructure development, education, healthcare and social welfare programs.
- Fiscal policy refers to how the government utilizes taxation and spending to shape the economy. During times of economic downturns implementing fiscal stimulus measures like tax cuts or increased government expenditure can bolster economic activity. However these actions are often constrained by worries, about inflation and budget deficits which can limit the effectiveness of policy.
Monetary Policy and Interest Rates
- Monetary policy refers to the measures implemented by the Federal Reserve to influence the availability and cost of credit within the economy. One important strategy employed by the Fed is manipulating interest rates. When the Fed reduces interest rates it makes borrowing more affordable encouraging businesses and individuals to increase their spending and investments. Conversely when the Fed raises interest rates borrowing becomes more expensive potentially slowing down growth.
- In light of the COVID 19 the Federal Reserve has taken extraordinary steps to support the economy. In March 2020, they significantly lowered interest rates to zero and initiated a substantial $700 billion quantitative easing program aimed at shielding the economy from virus related impacts. These actions have contributed towards stabilizing the economy and facilitating lending; however there are concerns regarding pressures and potential long term consequences, on financial systems.
Canada boasts the 10th largest economy globally with a strong focus on the service sector. This sector contributes significantly to a per capita GDP of around 51,987 USD (2021) experiences an annual growth rate of 4.5%. The Canadian economy thrives on its range of sectors, which include natural resources, trade and investment innovation and technology infrastructure development, human capital as well, as government policies and regulations. It is renowned for its standard of living, stable political landscape well established infrastructure and highly educated workforce.
- Canada is rich in natural resources encompassing oil, gas, minerals and timber. These valuable assets have played a vital role in propelling economic growth and development within the nation.
- Being the fourth largest global producer of oil and gas Canada boasts substantial reserves located primarily in Alberta and Saskatchewan. Notably it possesses the world’s largest oil reserves while ranking as the fourth largest oil producer and exporter. The oil sands in Alberta make a contribution to the country’s GDP and generate numerous employment opportunities within the region. According to data from the Canada Energy Regulator, Canadian oil production averaged 4.80 million bpd in 2022 showing an increase from 4.61 million bpd in 2018.
- Canada stands as a supplier of minerals like gold, copper and nickel. In 2021 Ontario and Quebec were responsible for approximately 70% of gold mining activities across Canada. These minerals find applications across industries including construction, electronics and manufacturing.
- Canada is blessed with vast forests that serve as a renewable resource, for its thriving timber industry. This sector contributes significantly to the economy through job creation well as export revenues.
Trade and Investment
- Canada has entered into several international trade agreements, such as the Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the Canada European Union Comprehensive Economic and Trade Agreement (CETA). These agreements have opened up avenues for Canadian businesses to expand their trade and investment opportunities.
- With its political and economic environment, highly skilled workforce and access to North American markets through the North American Free Trade Agreement (NAFTA) Canada has become an appealing destination for foreign direct investment. In 2019 Canada attracted a substantial $51.3 billion, in foreign direct investment.
- Canada's top export markets include the United States, China, and the United Kingdom. The country’s exports encompass a range of sectors including natural resources, manufactured goods and services.
Innovation and Technology
- Canada has a history of prioritizing research and development especially in areas like biotechnology, clean energy and digital technologies. This focus on investment has resulted in the creation of groundbreaking products and services that have played a role in driving economic growth.
- Canada’s startup ecosystem has flourished, witnessing the emergence of numerous innovative companies. The government’s initiatives like the Startup Visa Program have played a role in fostering this growth by encouraging foreign entrepreneurs to establish their businesses within Canada.
- Canada has made investments, in digital infrastructure including high speed internet and advanced telecommunications networks. These efforts have created an enabling environment that supports innovation and entrepreneurship.
- Investing in transportation infrastructure plays a key role in driving economic growth and fostering development. Canada boasts a developed highway network and major ports that facilitate efficient movement of goods and services within the country and across the globe.
- When it comes to telecommunications Canada excels on the stage with its advanced infrastructure. The telecommunications sector makes a contribution of nearly $76 billion to the Canadian economy and supports over 600,000 jobs. In today’s era high speed internet and wireless networks are imperative for businesses to remain competitive and for individuals to stay connected.
- Canada’s energy infrastructure is undeniably vital to the nation’s economy with natural resources like oil, gas and hydroelectric power extensive infrastructure is required for their extraction, transportation and distribution to both domestic consumers as well, as international markets.
- Canada’s robust economic growth is significantly influenced by its educated workforce. The nation boasts an education system and allocates substantial resources to skill development programs ensuring that its workforce remains competitive in an ever evolving global economy. Remarkably than 57 percent of workers aged 25 to 64 hold a college or university credential surpassing all other G7 countries. According to Statistics Canada, nearly one in four working age individuals possessed a college certificate or diploma or an equivalent qualification in 2021.
- Canada’s strengths lies in its diverse population, which greatly contributes to the country’s economic accomplishments. By fostering inclusivity and embracing diversity within the workplace and society as a whole Canada taps into the pool of talents and skills offered by individuals, from various backgrounds and experiences.
Government Funding and Incentives
- Canada has a notable track record of providing government funding and incentives to foster economic growth. These policies and regulations have played a role, in facilitating the country’s economic prosperity.
- The Canada Job Grant program provides funding to employers to help them train and hire new workers.
- The Scientific Research and Experimental Development (SR&ED) program in Canada offers assistance, for research and development initiatives. It is a tax incentive program that promotes businesses to invest in projects. Companies can receive tax credits for expenses incurred during their research and development activities.
- The Export Development Canada (EDC) provides financing and insurance solutions to help Canadian businesses expand their international trade.
Research Nester supports businesses by offering current insights, into the North American markets. This valuable information enables companies to make informed choices regarding their offerings, pricing strategies and also helps them identify untapped markets and potential growth opportunities. Additionally, Research Nester also helps businesses gain insight into their competitors' strategies, allowing them to develop better strategies to stay competitive.