U.S. Vs. Canada Consumer Spending: Who is More Budget Savvy?
If you like data crunching and analysis, you’ll dig this. If you like to compare your American self to Canadians (or vice versa), you’ll dig this even more.
I thought that was cool… but, I’m not Canadian. So I wanted to dig up American consumption habits during the same year to compare to our friends to the North.
I had questions like:
– how much do Canadians spend on health care vs. Americans?
– how much do Americans spend on housing vs. Canadians?
– what are the overall consumer household spending amounts of both countries?
– who is more budget savvy?
– why are beavers so loveable?
I wanted answers, eh. So I went oot and aboot to find them.
Importance of U.S. vs. Canada Dollar
Before we look at those numbers, it’s important to note how much the comparative value of the U.S. Dollar vs. the Canadian dollar.
On June 30, 2011, for example, one U.S. Dollar could buy you $0.9645 Canadian. That is rather eye opening when you consider that as recently as 2002, the exchange rate was one U.S. dollar to $1.62 Canadian (the highest the dollar has ever been valued against the loonie).
2009 was an interesting year in that the U.S. Dollar peaked at about $1.28 CAD, but dropped to $1.05 by the end of the year.
Why does this matter? The dollar totals cited are in USD and CAD. On the surface it looks like the Canadians spent slightly more than Americans that year. However, when you factor in the exchange rate, that’s not the case. Canadians actually spent slightly less than Americans as many of the categories they spent on (transportation, food, and apparel) would have been directly impacted by the exchange rate. Canadian dollars were worth about $0.87 US, on average, over the course of the year. Here is a chart of the CAD vs USD to see what I’m talking about.
U.S. vs Canadian Spending
The table below shows the comparative spending amounts in seven of the largest categories: housing, transportation, food, insurance, health care, entertainment, and apparel.
The final column concludes with a comparison of U.S. spending compared to Canadian. In the categories directly impacted by the exchange rate, I adjusted. Over the course of a year, income would not be impacted by exchange rate, nor would housing, or insurance premiums, so you wouldn’t want to apply a direct 0.87X multiplier to all of the Canada spending totals. It’s not a perfect comparison, but about the best anyone can do. Here are the results:
If you’re an American, red is bad and green is good. If you’re a Canadian, just the opposite.
As you’ll see, Americans spend about 20% more on housing, 1% more on food, 28% more on insurance, 56% more on health care, and about 2% more overall.
They spend about 10% less on transportation, 11% less on entertainment, and 30% less on apparel.
Observations & Theories
There are some interesting conclusions you can make from this data.
Consumer-Driven Categories: On the surface, Canadians would appear a bit…. shallow, shall we say? On the 3 most consumer driven categories, they spent more than Americans: 10% more on transportation 11% more on entertainment, and a whopping 30% more on apparel (no wonder they look so good).
Americans are spending more in categories that they have less control over: 20% more on housing, 1% more on food, 28% more on insurance, and a ridiculous 56% more on health care.
Housing: Canada hasn’t had a housing bubble burst like the U.S., and with 20% more being spent by Americans, it’s no surprise to see why Americans have had the trouble we have. We were simply spending too damn much on housing!
Transportation: Transportation surprises me a bit. The larger Canadian cities that I’ve been to typically have much better public transport than equivalent American cities. And Americans have a reputation for pissing money away on luxury vehicles. Way to drop the ball, Canucks! My only guess here is that there is just so much damn open area in Canada that many Canadians are forced to drive further and spend more on fuel than Americans.
Insurance & Health Care: These two are closely tied together. Americans are spending a staggering 28% more on insurance and 56% more on health care than Canadians. This is not a big surprise as Canadian health care is publicly funded and most health services are free at the point of use.
By the way, Canadians love it. A 2009 Harris/Decima poll found 82% of Canadians preferred their healthcare system to the one in the United States, more than ten times as many as the 8% stating a preference for a US-style health care system for Canada.
Overall: Just looking at the two, I’d have to say Americans are a bit more budget savvy, to my surprise. Americans have been hammered on housing costs (pay what the market dictates), higher insurance premiums, and haven’t had a choice on health care costs.
Meanwhile, Americans have spent less on those very consumer-driven categories: transportation, apparel, and entertainment.
So there you have, some surprising results.
As for those loveable beavers? They mystery continues…