07:02 AM EDT, 08/14/2025 (MT Newswires) -- It's well known that Canadian real economic growth has trailed

behind the United States in the past 10 years, after closely shadowing it in the prior 20 years, said Bank of Montreal (BMO).

Since mid-2015, the U.S. economy has grown by a cumulative 5.6% more than Canada. Many have pointed to Canada's woeful productivity performance over that stretch, and/or the policies of the prior government, note the bank.

It certainly runs counter to the narrative that strong population growth equals strong economic growth as the past 5-10 years have destroyed that view, pointed out BMO.

However, Canada has had bouts of relatively weak productivity before, so something else may be afoot, stated the bank. First, the solid U.S. growth in the past 10 years is as much a driver of the gap as weak Canadian growth.

It added that U.S. government finances have deteriorated "massively" in that time -- in 2015, Washington's budget deficit was 2.4% of gross domestic product, but it will be closer to 6.4% this year.

In contrast, Caanda's gap has gone from about balance in 2015 to maybe 2% of GDP, a much smaller net deterioration. That alone accounts for a good portion of the growth gap, added BMO. In other words, the U.S. has bought some of the stronger growth by seriously weakening government finances.