Who is Richer Canada or the USA

 That's because Canada's economy depends a lot on how its much bigger neighbor to the south does. Canada will have a hard time getting out of its economic rut without a strong American economy.The Canadian economy has regained almost 90% of the output lost during the pandemic thanks to strong monetary policy and government spending. This sets the stage for what is expected to be the fastest rate of growth in a generation.

The jobless rate and Canada's real GDP (SAAR)Some people say that Canada's economic boost program is the biggest since World War II. It was made to fight the virus and soften the blow of shutting down the economy last year. In a few weeks, the federal government will release its first new budget in almost a year and a half. Along with it, they are likely to make more steps to speed up the recovery.

That being said, the American Rescue Plan and Canadian relief measures are what will wake up the economy

People in the US are getting direct payments, which will make them spend more. This will lead to a strong growth this year and next. This will be good for the Canadian economy. As you can see from the picture below, there is a strong link between US consumer spending and Canadian economic growth.

The rate of growth in real private consumption expenses in the US and real GDP in CanadaAbout 85% of the $1.9 trillion in the American Rescue Plan is set aside to deal with the pandemic. As the flu spreads, the economy also spreads. Seventy-five percent of the whole deal is one-time spending, and this year, nearly $1.16 trillion of it is planned to be spent. This year, about half of the $680 billion in income transfers will come in the form of stimulus checks.

We raised our growth prediction for the American economy this year from 6.1% to 7.5% because of all this stimulus spending and a loose monetary policy. There is a real chance that growth will be even faster than that. The economy will grow at the fastest rate since the 1980s, and maybe even since World War II.

Canada can also look forward to a strong path

Businesses in the U.S. will need to buy more energy from Canada to power their companies as the economy gets better, and people and businesses in the U.S. will also buy more goods and services from Canada. All of this comes with the territory being one of the United States' main trade partners, which can be good and bad at times.

We now think that Canada's economy will grow by 6.5% this year, which is less than the US's 6.7%. This is partly because people in Canada are taking longer to get vaccinated. Possible lockdowns because of a third wave of the coronavirus and low vaccine rates are two things that could go wrong with our plans.

There is another risk that has to do with economic policy. Some people who write about politics have said that the federal government should cut back on spending. But since lockdown steps could be put back in place, this might not be necessary. American money spent A big question, though, is how much Americans will spend their stimulus checks instead of saving or paying off debt (which could lead to more spending in the future). The National Bureau of Economic Research's first look showed that Americans spent 40% of the one-time $1,200 payments they got under the CARES Act last spring. The other 60% was saved or used to pay down debt.American families' savings have grown since then, and their balance sheets have gotten better. They are now flush with cash and eager to get back to normal life—and spend it. There is also the issue of job losses and how much the money coming to Americans will be cancelled out by unemployment as the pandemic continues and the economy slows down. Even though the job market is hurting, we expect a lot of hiring to happen in the second part of the year, when vaccines are given out, stores reopen, and people spend money.

There is a lot riding on the trust of American shoppers, who make up about 70% of the country's GDP

This trust is likely to grow as the idea of herd protection against the coronavirus becomes more real.The Nanos Economic Mood Index showed that the economic mood in Canada reached its highest level ever. This means that Canadian families are optimistic about the economy and its recovery. Over the next two years, household spending is likely to grow a lot. This is because people haven't fully recovered from the plague yet.

How the economy is doing We do think that Canada's top-line consumer price index will rise to 2.75 percent by the middle of this year. This is mostly because of base effects from last year related to the improvement in oil and energy prices, but we think that this rise will only last for a short time.We think that the overall inflation rate will go down to 2%. We don't think that prices will go up permanently or that inflation rates will change.