With a fiscal deficit of US$1.6 trillion, the United States is typically the go-to punching bag for budgetary silliness, but economists at

National Bank of Canada say Canada shouldn’t be as smug as it is when it comes to government finances.

“America has been a budgetary basket case for ages while Canada has routinely been held up as a model of fiscal rectitude,” Warren Lovely and Taylor Schleich, economists at National Bank, said in a note. “Believe it or not, Canadian governments (federal and provincial) are currently tapping debt-capital markets just as aggressively as that oh-so-fiscally reprehensible Uncle Sam.”

The pair acknowledged there are some “nuances,” but a borrowing spree at the federal and provincial government levels helps to make their case.

For example, from April to August, those two levels of government issued approximately $220 billion in gross

bond supply, which includes refinancing, with Ottawa’s share up 44 per cent from a year earlier. The provincial share was a bit less than a year ago, but was double what would be considered “normal,” the economists said.

All told, those issues represent 1.4 per cent per month of Canada’s gross domestic product (GDP).

In the U.S., gross Treasury issuance neared US$2 trillion. “That’s nothing to sneeze at surely, but, at 1.3 per cent of GDP per month, it was a somewhat more restrained pace than Canada,” Lovely and Schleich said.

The picture doesn’t look much better when they considered net bond issuance, which excludes refinancing.

On both sides of the border, the pace of supply over the five-month period  was equivalent to 6.1 per cent of GDP on an annual basis.

“Net or gross, Canada is right there with the U.S., though this isn’t a race one aspires to lead,” they said.

Some might ask why federal and provincial debt were lumped together, but local and state-level debt were left out on the U.S. side of the ledger.

The economists said Canada’s “more decentralized” model of government means other levels have a greater ability to issue debt, while debt issuance in the U.S. is “centralized … where Washington is undeniably the focal point.”

To illustrate their point, they broke down outstanding debt securities in Canada and the U.S. by government level.

In Canada, non-federal levels of government held $1.2 trillion in

debt in the first quarter, while Ottawa held $1.4 trillion. In the U.S., outstanding federal debt securities totalled US$28.5 trillion, while state and local debt came in at US$3.4 trillion.

Looking ahead, more borrowing by Canada’s federal government is on tap, given the delayed

federal budget will be released in the fall. “Notwithstanding a promised revamp of the budgetary accounting framework — consistent with the (Prime Minister’s) seemingly paradoxical ‘austerity and investment’ catchphrase — abundant (Government of Canada bond) supply and a rising debt burden seems where Ottawa is headed in the medium term,” Lovely and Schleich said, referring to an order from the federal finance minister for all departments to find savings.

Prime Minister Mark Carney will also soon announce expensive infrastructure projects of “national interest.”

In the U.S., President Donald Trump ‘s massive tax bill creates a lot of budgetary uncertainty in America, leaving federal finances on the hook for as yet unfunded tax breaks.

Many Canadian finance ministers have lauded the country’s national debt-to-GDP ratio in the past, praising it as among the lowest in the Group of Seven countries. But that ranking is based on a healthy social security system that includes the Canada Pension Plan.

“There should be no room for fiscal complacency, in Canada or elsewhere. Rather, financial transparency, budgetary believability and policy effectiveness will be paramount, now and into the future,” the economists said.

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Canada’s merchandise trade deficit narrowed by more than expected as the country’s exports show signs of a slow rebound from the shock of United States tariffs.

The country’s trade shortfall with the world was $4.9 billion in July, according to Statistics Canada data released Thursday. That’s slightly smaller than the median projection of a $5.3 billion deficit in a Bloomberg survey of economists. — Bloomberg

  • Prime Minister Mark Carney is expected to make an announcement in the Greater Toronto Area today about Canada’s “strategic sectors.”
  • Today’s Data: Canada and the United States report jobs numbers for August.
  • Earnings: The Children’s Place
  • New report challenges canola’s $43-billion contribution to GDP
  • CRA complaints are spiking. Will Ottawa’s deadline for improved service fix things?
  • Why parking spots could be the next back-to-the-office battleground

Read the full story here. September is back-to-school month, and if you’ve got kids and there’s any remote chance they will pursue

post-secondary education , contributing to a r egistered education savings plan (RESP) is the best school supply you can purchase this fall. Jamie Golombek goes beyond strategy and breaks down the numbers to show why it’s important to start contributing to your child’s RESP as soon as possible.

Find out more here. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at

wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus, check out his

Financial Post on YouTube

mortgage rate page for Canada’s lowest national mortgage rates, updated daily. Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Gigi Suhanic with additional reporting from Financial Post staff, Canadian Press and Bloomberg.

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