Canadian Business, et al. - Canadian economic growth will likely slow as U.S. cuts spending, say economists

Canada likely faces slower economic growth even if the United States manages to avoid default on its debt or a credit rating downgrade, economists said Wednesday. The U.S. government's need to cut spending by between US$2 trillion and US$4 trillion over a decade would delay its recovery and drag down Canada's rebound because the two economies are so closely linked.

"The short-run effect of these changes is going to be to slow the recovery even further," says Christopher Ragan, an associate economics professor at McGill University. "But at the same time they need to put themselves onto a fiscal track that is credible and show they are not going to be hitting the debt wall."