It’s ’Bragging Rights Day’ in Canada

A preview of Canada and U.S. GDP numbers
North American Beaver/Chuck Szmurlo

What happens on July 31, you ask? Well, this upcoming July 31 both Canada and the U.S. will be releasing GDP estimates, and — you guessed it — ours are supposed to be better.

I should specify that by “better” I mean that Canada’s numbers are likely to surprise on the upside, whereas the U.S. will likely disappoint. I should add another asterisk: Ours are monthly GDP figures, whereas the U.S. will be reporting on the three-month period from April to June that makes up the second quarter. Apples and oranges, you say? Well, our apples are still better than their oranges. As the recovery down south gains momentum, our bragging days are numbered. So enjoy this last remnant of our glorious spell as a global economic champion and don’t worry about the fine print.

Here’s an overview of what economists expect:

Canada – May GDP:

Who thought May would turn out so well? Analysts are revising up their forecasts and the Bank of Canada might soon have to follow suit. The expectation is for a gain of 0.3-0.5 per cent of GDP, which would mean the economy is on track to beat the BOC’s tame projection of one per cent growth in the second quarter. This would be highly unusual since, as my colleague Tamsin McMahon recently pointed out, the bank is usually overly optimistic.

Before you get carried away with euphoria, though, I should note that the surprise performance seems to be largely a confluence of one-off lucky circumstances. Fertilizer sales got an unexpected boost from pent-up global demand due to a late planting season caused by an unusually wet and cold Spring. Retail sales, likewise, soared as Canadians celebrated the end of this long, crappy Spring spell with a bit of extra spending. The weather must also have something to do with a recent rebound in the number of houses being built after a grim winter. And finally – the most random seasonal twist of all — there was the impact of the NHL lockout, which ensured hockey season was still ongoing in May.

Savour the propitious confluence of freak events while it lasts, for June is poised to look like the exact opposite of May, due to the impact of the Alberta floods and Quebec’s construction strike.

U.S. – second quarter GDP (advance estimate):

Nobody predicted great things for the second quarter after Washington raised income taxes on the rich, as well as payroll taxes on everybody, and slashed federal spending through the sequester. Still, the economy might have missed even those tempered expectations. Americans pushed the stop button (or, at least, the pause button) on their recent shopping binge: Consumer spending is projected at 1.4% for the quarter, more than one percentage point lower than in the January-to-March period, according to CIBC. Exports continue to linger, as Europe and emerging economies struggle. Even the housing market seemed to sputter a bit toward the end of the quarter, with both the pace of residential real estate construction and sales of existing homes slipping in June.

Wednesday’s figures will reflect an 80-year statistical revision by the U.S. Commerce Department that should boost GDP levels by three per cent. The bump-up, though, shouldn’t affect growth rates.