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Purchasing power parities (PPPs) are estimates of relative purchasing power between two or more currencies. By adjusting to a common currency and a common set of prices, they can be used to make international comparisons of the relative volumes of goods and services invested in or consumed.

An improvement to the methodology for the total economy PPP, incorporated with the previous data release, is described in this report. This new method yields a higher PPP for the total economy in the last few years compared to a PPP extrapolated under the old method using gross domestic product (GDP) implicit price indexes. The new extrapolation method, which uses implicit price indexes for final domestic demand, is consistent with how PPPs are calculated in the benchmark year, which should help to reduce revisions to the data.

Some of the key findings are:

• the PPP for domestic income rose from 0.83 in 2002 to 0.90 in 2008 before dropping back to 0.88 in 2009, meaning that the purchasing power of the Canadian dollar went from 83 percent to 88 percent of that of the American dollar;
• per capita real expenditure on final goods and services in the United States was 21 percent higher than in Canada in 2002, but only 15 percent higher in 2009;
• real consumption by Americans was 34 percent more than that of Canadians in 2002, but only 23 percent more in 2009.