For the first fiscal quarter of 2014, Canada will outpace the U.S. in GDP growth. Although the U.S. markets picked up after a rough winter, GDP growth is still set to decline by 0.5% according to the Globe and Mail. Meanwhile, Canada saw GDP growth of 1.7% in the first quarter, and although this is down from 2.9% in the previous quarter, GDP growth is still healthier than that of the U.S.
Harsh climate is said to have been one of the main factors that led to the decline in U.S. GDP growth, particularly in housing. Despite this setback, some experts believe that growth should pick up provided that this year’s temperatures remain consistent. The United States is projected to surpass Canada in GDP growth by the end of 2014, and 2.6% GDP growth is expected.
On the other hand, critics such as Capital Economics’ David Madani are not convinced that the slow in GDP growth is due to winter weather. His reasoning is that even in the first quarter, as weather conditions improved, the U.S. economy lost momentum. Being simply one factor, GDP growth should have theoretically picked up with improved weather conditions towards the end of the quarter. Additionally, with Canada having similar weather conditions to the U.S., we cannot as a nation entirely contribute their successful GDP growth to climate alone.
Analysts at Scotiabank still believe that increasing GDP growth in the U.S. is a possibility. However, in order to accomplish this, “a return to stronger activity will be led by improving household spending, increased business investment, strengthening exports, elevated oil and gas development, and a reduced pace of government restraint,” are all necessary. Additionally, significant order backlogs in terms of transportation equipment and housing construction materials will increase export opportunities available for Canada and Mexico, the two NAFTA partners of the U.S.