Answer to Q1: More business investment, government spending and more exports will not be able to increase fast enough or could lead to overpass consumer spending, which constitutes the largest part of the economy.
Answer to Q2:
US had a 70% consumer expenditures of the GDP in comparison of Canada’s 56.4%
US investment was lower by almost 3% in comparison to Canada
US net exports were -4.5% for the 10 years and close to 7% lower than Canada
US government expenditures were close to 4% lower than Canada
Overall US was lacking in 3 out of 4 sectors to Canada, only showing bigger Consumer expenditures.
According to William R. Emmons the five trends working against consumer spending are as follows, lower wealth, stagnant incomes, tight credit, fragile confidence and looming reversal of stimulus. U.S. consumers spending may grow much slower than it was in decades before now because household wealth is getting lower in a rapid manner during the Great Recession. It stated dropping from 210,000 during the first half of 2007 which get lower by 24 percent in 2011 at 160,000. Since the house prices that represent principal asset in many cases kept getting weaken even as stock market values, it is very possible that consumer spending get much slower than it was recent decades ago. According to Emmons higher investment spending has been associated with higher economic growth. Also, it is stated that since mid-2009 economy recovery is under way job growth barely matches population growth, incomes of the typical worker are barely keeping up with inflation therefore, there is more possibility for consumers spending to drop, most especially when income is not balancing up with inflation.
Looking at the rate credit is been giving out to people in the U.S. today, consumers are going through much restricted basis than before. It is stated that now mortgage credit is less available to all but in the strongest borrowers than was the case just a few years ago. Even people with higher credit scores need substantial equity in order to borrow for house purchase or mortgage refinancing, knowingly, that house price represent the principle asset in many cases, investment spending may be lower creating a weaker economy. Inflation-adjusted per-capita consumption expenditures grew at a 2.4 percent annualized rate during the decade ending in December 2007 but have grown at only a 1.4 percent annualized rate in the 28 months since the recession ended June 2009 through October 2011. Therefore money earned is not keeping up with inflation eventually leading to lower consumer spending. Finally, a tightening of policy measures represents a withdrawal of support for household income and wealth. For this reasons, consumers spending in U.S. can barely be as it was recent decades ago, less spending is expected.