Comparing Canadian and US unemployment rates during the recession and recovery

The striking feature of this diagram is how the Canadian and US unemployment rates moved so incredibly similarly until after Obama's $830 billion "Stimulus" was passed.
Sources: for Canada and the US.

UPDATE3: Welcome to those from Talking Point Memo, though TPM has made multiple incorrect claims. While TPM cites Bachmann's tweet, Eric Kleefeld doesn't mention fails to mention her Facebook post. Tweets limit posts to 140 characters, Bachmann's was 138, not much extra to into extra details or even longer words such as "small" or "little" instead of "no." It is true that Bachmann's tweet said Canada had "no stimulus," but her simultaneous Facebook post was much more complete: "Consider Canada, whose unemployment equaled America's at the bill's passage. Now, without massive gov't intervention, the Canadian unemployment rate is a full 20% less than ours." There was nothing wrong with that Facebook post, but mentioning it would have made TPM's article a lot less compelling. (Note that the "Markie Marxist sez" shown in the picture below is from the first comment on my post.)

UPDATE1: What I have pointed out is that Obama's "Stimulus" was three times bigger on a per capita basis than the Canadian stimulus, and Obama raised marginal income tax rates while Canada has cut marginal tax rates. For a discussion on the massive difference in size and composition of the conservative minority Canadian government and the liberal/Keynesian/Obama US stimulus program see this here.

TPM's claim about relatively strict banking regulations in Canada is wrong on two counts. 1) Most importantly, it doesn't explain the sharp difference in unemployment rates between Canada and the US right after the Obama "Stimulus." Before the Stimulus, the unemployment rates were moving together very closely. After the Stimulus, the US rates rose much higher than the Canadian rate. 2) It is factually wrong anyway. Canada simply didn't have the crazy types of government regulations that the US has had that forced banks to make loans that they didn't want to make (see here for some examples).

UPDATE2: I could rewrite what I have already put up about the banking regulations in Canada, but TPM readers just keep repeating what they read on that website without any recognition that it is nonsensical. Even if the claim about regulations were true (and it isn't), it can't explain why the changes in unemployment in the two countries were identical right up until Obama's Stimulus and then the unemployment rate diverged dramatically.

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Blogger Chas said...

Markie Marxist sez: "My commie compadres in Canada may be fairly good Marxists doing a fairly good job of destroying capitalism, but they don't have Comrade Obama going for them! Ha! Ha! All your Obama stimulus package is belong to us! Ha! Ha!"

6/16/2011 9:54 AM  
Anonymous Anonymous said...

What you say!

6/20/2011 12:02 PM  
Blogger Kim Cluney said...

The X axis should be set at 0. This is a misleading graph.

6/20/2011 12:22 PM  
Blogger Kim Cluney said...

The X axis should be at 0. This is a misleading graph.

6/20/2011 12:22 PM  
Blogger DJH said...

Yep. We (Canada) had a stimulus program of roughly the same proportional size to our economy. Amazingly enough, it had about the same results.

Drive the roads up here. Every single building project everywhere has a "Canada's Economic Action Plan" sign in front of it.

6/20/2011 3:22 PM  
Blogger Greg said...

Considering that Canada is the US's largest trading partner, it is no surprise their economy will mirror ours. The stimulus certainly stimulated the economy - both of our economies.

6/20/2011 3:45 PM  
Blogger Tracy said...

Gee, I googled "2009 canada economic stimulus" and got this, courtesy of the Department of finance Canada:


6/20/2011 9:06 PM  
Blogger Rebel1 said...

Mr Lott: you are conveniently forgetting the fundamental difference between the US and Canada, difference which is at the core of how Canada avoided the worst of the Great Recession: Banking Regulations, which preventing the Canadian banks from collapsing the way yours did. It's dishonest of you to omit this crucial fact.

6/20/2011 9:48 PM  
Blogger Rebel1 said...

Just so you see it's not just me who says this:

"Jim Flaherty, the finance minister, attributes Canada's strong performance to its "boring" financial system. Prodded by tight regulation, the banks were much more conservative in their lending than their American counterparts. Those that did dabble in subprime loans were able to withdraw quickly. This prudence kept a lid on house prices while those in America were soaring, but it paid off when the bust hit."

This is from the CONSERVATIVE Finance Minister, of the VERY CONSERVATIVE Government of Canada, under Stephen Harper, an Evangelical Christian whose views are indistinguishable from those of mainstream American Republicans.

6/20/2011 9:51 PM  
Blogger Erica D said...


please visit that website for all the CORRECT info you might need about the stimulus Canada did, in fact, use.

6/21/2011 12:53 AM  
Blogger Unknown said...

Cool Mr. Lott. Canada has strong banking regulations, strong gun control laws, and universal health insurance. All this and she managed to survive the economic downturn relatively unscathed, and what small hit she did take she recovered quickly. May be a lesson there to be learned.

6/21/2011 10:31 AM  
Blogger David said...

The USA's stimulus package may have been three times the size of Canada's. but Canada also didn't waste 40% of the stimulus on tax cuts.

6/21/2011 8:21 PM  
Blogger John Lott said...

Dear NY: Please read the link that I provide on the size and composition of the two stimulus programs. Half of the Canadian stimulus involved tax cuts. 22 percent of Obama's stimulus involved tax cuts. But the important point is that Obama's cuts "increased" marginal tax rates. Canada's tax cuts reduced marginal interest rates. Please see above for links.

6/22/2011 3:10 AM  
Blogger Unknown said...

One of the main reason that per capita Canada creates 3.5 private sector jobs for every private sector American job created is that the universal single payer health care system means that Canadian business is free of the massive health care costs that cripple American businesses. If the US had a universal single payer health care system, the US would be creating as many jobs per capita.

Furthermore, because every Canadian has access to the health care which most Americans are denied by the insurance company bureaucrat wedged between Americans and American physicians means that Canadian workers are far healthier and more productive than acutely and chronically ill American workers are.

Canadians live four years longer than Americans and Canadian workers are far more productive than Americans because, as 91% of Canadians believe, Canadian health acre is far superior to the health care which most Americans have access to (and no, there are not Canadians streaming across the border for American health care). There is definitely a stream across the border for health care, but it is Americans (2 million a year) streaming to CANADA for health care they are denied in the US, because US health care is vastly inferior to the health care we have in Canada.

Any American who believe that Canadians flock to the US for health care is sadly misinformed. The flow is totally the other way. In fact, Canadians who work in the US insist on going back to Canada for treatment and wouldn't touch American health acre with a ten foot pole.

6/22/2011 11:18 AM  
Blogger Thomas Asselin said...

The U.S' unemployment rate in hovering around 9%, How is Canada's "20% lower"? Which it isn't by the way. It's sitting at 7.6%

Oh and Canada DID spend stimulus money. not a lot compared to the US but for the country's size it was quite large, plunging the budget's multibillion surplus into a record deficit.

6/22/2011 3:23 PM  

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