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The Scale of Canada's Deficit and What it Means: Lessons on Fiscal Policy with Trevor Tombe
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In this episode of Canada’s Economy, Explained, host Marwa Abdou sits down with Dr. Trevor Tombe, Professor of Economics at the University of Calgary and Director at the School of Public Policy.
Tombe discusses the widening fiscal divide between Canada and the United States and what it means for Canada's economy, trade, and future stability. While Canada’s federal deficit stands at 1.6% of GDP, the U.S. deficit has ballooned to 6.2%, creating real risks for global markets.
Tombe explains that Canada’s debt-to-GDP ratio remains stable and manageable at 42%, compared to over 100% in the U.S. He warns that political dysfunction in Washington is raising borrowing costs which further strains U.S. finances. Meanwhile, Canada must remain vigilant, especially in addressing productivity declines and preparing for rising healthcare costs. Tombe notes, “If historical patterns had continued, Canada’s economy today would be 18% larger.” He also points to a 500% spike in Canadian business uncertainty due to pending U.S. trade decisions.
Enjoy this fascinating episode with insights from a leading Canadian Economist.
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