4. Data overview and results

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The results based on the medium expenditure assumptions are discussed in this section, whereas the low and high expenditure estimates are presented in the appendix. The medium scenario assumes that Canadians travelling to the United States on overnight trips, for personal reasons, will bring back to Canada, 25% of the value of their transportation spending (which may include items such as tires and gasoline). It assumes that 10% of food and beverage expenditures and 15% of recreation and entertainment expenditures are transported across the border, as those categories are more likely to include services consumed in the United States. The medium scenario also assumes that 80% of the spending in the other category will be brought back to Canada. This is the main category that affects cross-border spending, since this is where travellers report what they spent on shopping and souvenirs. Lastly, 0% of accommodation expenses are assumed to be brought back to Canada. This category is mainly comprised of hotels, motels and other resting places, which are services that cannot be transported.

With regards to same-day trips, the medium scenario assumes that 50% of spending is on goods that are brought back to Canada. For goods imported by post and courier, the medium scenario makes the assumption that the personal expenditure portion of postal imports is 85%, 25% for courier imports, and 100% for the postal imports adjustment that accounts for duty-exempt and non-taxable imports.

The aggregation of these components—overnight and same-day spending, postal and courier imports and motor vehicle imports—provides estimates on total CBS in the United States, from 2006 to 2012. With the exception of 2009, total spending has increased year-over-year, and grew by 7.9% in 2012, to a total value of $8.0 billion, a 72% increase over the 2006 estimate (Table 4). In comparison, estimates from the low and high statistical assumptions place the total value of CBS for 2012 at $5.9 billion and $10.8 billion respectively.

Chart 3 demonstrates that the cross-border spending components detailed above are correlated with the exchange rate. Between 2010 and 2012, when the Canadian dollar approached or surpassed parity, the value of these cross-border expenditures increased by 18.9%, from $6.8 billion (2010) to $8.0 billion (2012), for the medium expenditure scenario. Conversely, in 2009 when the Canadian dollar weakened during the recession, the total value of goods purchased in the United States declined by 10.8% over the previous year.

Chart 3 of Income and Expenditure Accounts Technical Series issue 2014076

Description for chart 3

Overnight spending and postal and courier imports both account for a large percentage of total cross-border spending, while same-day spending and motor vehicle imports account for significantly smaller portions. In 2012, the percentage contributions towards the total purchase of goods from the United States was 45.3% for overnight trips, 38.9% for postal and courier imports, 10.5% for same-day trips and 5.3% for motor vehicle imports (Chart 3).

Table 4
Annual estimates of expenditures on goods purchased from the United States and brought back or delivered to Canada, medium expenditure scenario
Table summary
This table displays the results of Annual estimates of expenditures on goods purchased from the United States and brought back or delivered to Canada. The information is grouped by Year (appearing as row headers), Overnight trips to the United States, Same-day trips to the United States, Motor vehicle imports, Postal and courier imports and Total cross-border spending, calculated using millions of dollars units of measure (appearing as column headers).
Year Overnight trips to the United States Same-day trips to the United States Motor vehicle imports Postal and courier importsNote 1 for table 4 1 Total cross-border spending
millions of dollars
2006 1,800 370 426 2,082 4,678
2007 2,148 429 1,050 2,326 5,953
2008 2,437 447 1,105 2,392 6,381
2009 2,466 421 560 2,248 5,694
2010 2,949 628 807 2,376 6,760
2011 3,261 794 619 2,775 7,448
2012 3,642 844 422 3,128 8,036

Table 4 illustrates that the value of goods purchased and brought back to Canada from residents taking overnight trips to the United States trended upwards between 2006 and 2012 and more than doubled (102%) in current-dollar terms over the 7 year period. In 2012, the estimated cross-border expenditure from these trips was approximately $3.6 billion, an 11.7% increase over the previous year. Same-day trip spending has also more than doubled over the analysis period (128%), and grew by 6.3% in 2012 to $844 million. There was a 5.8% decline in spending on same-day trips in 2009, when the Canadian dollar depreciated 6.5% against the U.S. dollar; however same-day spending increased by 49% the following year, as the Canadian dollar rebounded by 10.8%.

Unlike 2007 and 2008, when the Canadian dollar reached parity and household imports of motor vehicles sharply increased and accounted for a considerable portion of the increase in cross-border purchases, the value of motor vehicle imports has trended downwards in recent years. By 2011/2012, domestic price adjustments by Canadian automotive dealerships on certain motor vehicles models sold in Canada, especially smaller models, made it less advantageous to purchase motor vehicles in the United States, and the composition of imports shifted to more high-end models. Motor vehicle imports were valued at $422 million in 2012, a decline of 32% from 2011. Postal and courier imports (including non-U.S. imports) increased from 2006 to 2012 and are estimated to be $3.1 billion in 2012, a 12.7% increase over the previous year and a 50% increase from 2006.

Table 5
Total cross-border spending and retail trade sales, medium expenditure scenario
Table summary
This table displays the results of Total cross-border spending and retail trade sales. The information is grouped by Year (appearing as row headers), Total cross-border spending, Retail trade sales and Total cross-border spending as a ratio of retail trade sales, calculated using millions of dollars and percent units of measure (appearing as column headers).
Year Total cross-border spending Retail trade sales Total cross-border spending as a ratio of retail trade sales
millions of dollars percent
2006 4,678 389,474 1.2
2007 5,953 412,597 1.4
2008 6,381 427,956 1.5
2009 5,694 415,716 1.4
2010 6,760 438,958 1.5
2011 7,448 456,730 1.6
2012 8,036 468,127 1.7

 

Table 6
Comparison of total cross-border spending as a ratio of retail trade sales
Table summary
This table displays the results of Comparison of total cross-border spending as a ratio of retail trade sales. The information is grouped by Year (appearing as row headers), Low expenditure scenario, Medium expenditure scenario and High expenditure scenario, calculated using percent units of measure (appearing as column headers).
Year Low expenditure scenario Medium expenditure scenario High expenditure scenario
percent
2006 0.9 1.2 1.6
2007 1.1 1.4 1.9
2008 1.1 1.5 2.0
2009 1.0 1.4 1.9
2010 1.1 1.5 2.1
2011 1.2 1.6 2.2
2012 1.3 1.7 2.3

Table 5 presents estimates of CBS for the medium expenditure scenario relative to the total value of Canadian retail sales.Note 1 This quantifies the value of CBS in relation to total retail spending in the domestic economy. Retail sales in Canada increased 20.2% from 2006 to 2012, notwithstanding the 2.9% decline in 2009. Depending on the year, CBS amounts to approximately 1.2% to 1.7% of domestic retail spending. This ratio has increased over time. In 2012, the total purchases of goods bought in the United States grew by 7.9% while domestic retail trade sales grew by 2.5%. That same year, CBS in the United States accounted for 1.7% of Canada’s total retail trade sales.

Table 6 examines the extent to which the ratio of cross-border expenditures to domestic retail trade sales varies across the range of statistical assumptions that this article has examined. For the low expenditure scenario, total CBS as a ratio of retail spending ranges from 0.9% in 2006 to 1.3% in 2012, while, under the high expenditure scenario, it ranges from 1.6% and 2.3%. Similar to the medium expenditure scenario, these proportions have increased over time, with a slight decrease in 2009.

Notes

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