National Bank of Canada (NBC) economist Taylor Schleich has highlighted a widening growth gap between the Canadian and U.S. economies, noting that since 2022, U.S. real GDP growth has consistently outpaced Canada’s performance [1]. According to the national accounts published last Friday, the U.S. economy outperformed Canada in 2025, marking the third consecutive year of U.S. outperformance and the seventh in the last eight years [1].
The report attributes Canada’s underperformance to weaker household consumption, exports, and especially business investment. Canadian household consumption has trailed the U.S. by approximately 3% cumulatively, and export growth has lagged by a similar margin [1]. The most pronounced gap is in business investment: since 2022, business investment grew more than 10% in the U.S., while it remained stagnant in Canada. Non-housing, private sector business investment in Canada has lagged the U.S. by more than 13% [1].
Despite expectations for stronger Canadian government spending in 2026, consensus forecasts indicate that this will not be sufficient to close the GDP gap. The U.S. is expected to maintain and even widen its growth advantage in 2026, supported by an engaged private sector and a stronger public sector impulse via the OBBB [1]. Persistent trade uncertainty is cited as a factor limiting Canadian business investment, making it unlikely that the gap will narrow in the near term [1].
Looking ahead, the report expresses hope that 2027 could be a better year for Canada, but current projections suggest continued U.S. outperformance in the immediate future [1].
CONCLUSION
The NBC report underscores a persistent and widening growth gap between Canada and the U.S., driven by weaker Canadian consumption, exports, and business investment. Despite increased government spending in Canada, consensus expects the U.S. to further extend its growth lead in 2026. Market sentiment remains negative for Canada, with little optimism for a near-term reversal.