We Canadians spend more on food and booze per capita and are more likely to own a home compared to our neighbours to the south, but Americans get more bang for their greenback, a new report shows.
TD Bank economists have crunched some data showing the spending habits of Canadians versus Americans, as well as how much people in each country earn and save.
"Canada and America are two very different landscapes and the two nations possess a different customer base," says the report written by economists Diana Petramala and Sonya Gulati.
The study is meant to paint a picture for retailers selling goods and services on both sides of the border, but is also good fodder for the ongoing Canada versus the U.S. debate (which, let’s face it, is mostly driven by Canadians).
The results show Canada has a more diverse population, we are more tied to homeownership, and our food and beverage consumption is greater than Americans.
Canadians spend about US$1,200 more per capita on food and beverages compared to people in the U.S.
"Interestingly, the additional money is spent equally on groceries and alcohol," says the report.
"Canada’s food and beverage consumption has always been higher than in the U.S., but it was abnormally greater in 2012," the report states.
Canadians spent almost three times more per capita on beer and wine than Americans last year, the economists point out, while noting that alcohol in Canadian stores is more expensive in the U.S., and we pay higher taxes.
"However, higher taxes surely do not account for the additional $600 US spend per year In fact, adjusted for price differences, Canadians still spent $317 US more on beer and wine than Americans," the report states.
Petramala says their data only captures spending at beer and wine stores - not bars. She said Americans may have bought more alcohol in bars last year, whereas Canadians went to beer and liquor stores.
“There was a sharp gain in the U.S. in sales at drinking places,” she says. “Whereas sales at drinking places (bars) in Canada have been in decline for three years in a row.”
Americans spend more overall per capita, or about $17,900 per year in retail stores versus $17,000 for Canadians.
"Americans have always spent more than Canadians – however, the difference has narrowed since the 2008-09 recession," the report says.
Americans also tend to shop more at Wal-Mart and other big box stores, where items are cheap and plentiful. Canada is catching up with more discount retailers such as Target moving in and Wal-Mart expanding from coast-to-coast.
“It’s of no surprise that Americans pay less for just about every consumer good around,” notes the report.
After adjusting the spending for price and exchange rate, the economists found Canadians would need to spend another US$4,000 per year to buy the same amount of stuff as the average American.
The report also slices and dices the spending habits across income and age groups.
For instance, it found that Americans between 35 and 54 years old earn more than Canadians in the same age group, and spend about US$50,000 more per year “on just about everything.”
Despite home ownership often being described as the American dream, more Canadians are realizing it, particularly after the last recession, the report says.
Canada’s growing housing market is driven by low interest rates, while many Americans were forced to give up their homes when the U.S. housing market collapsed as a result of the subprime mortgage crisis.
Canadian policymakers have tightened mortgage rules to prevent a similar U.S.-style housing crash. Still, Canada’s market continues to chug forward, defying expectations of a significant slowdown.
The TD study underscores some of the key differences between Canadian and American consumers, based on population, income and spending habits.
"What has almost certainly been confirmed … is that despite similar cultures and language, Canadian and U.S. consumers are quite different," the report says. “On balance, Canada has a more diverse population. Americans appear to be more prolific in their spending, but their money goes further. Canadians have a stronger focus on home ownership, which constrains spending on other items, except apparently alcohol.”
Other highlights from the TD report:
- Americans are richer: Average disposable income for a Canadian was US$26,888 versus $35,950 in the U.S.
- Canada’s population is growing faster: The U.S. population is nine times larger than Canada’s, but annual population growth was 1.3 per cent in 2013 versus 0.7 per cent in the U.S.
- Canadians are older: The median age in America is 37 versus 40 in Canada. Still, the prime working age of 30-54 years old is the largest segment of the population in both countries.
- Canada is more diverse. About 21 per cent of Canada’s population, or about 7 million people, were born outside of the country, the highest level among the G8 nations. That compares to about 13 per cent in the U.S.