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One of the things complicating analyses of Canadian business cycle policy is that too many Canadians pay too close attention to what is going on in the United States, and not enough to what is happening here. The question of whether or not governments should embark on a new round of fiscal stimulus by means of increased spending on infrastructure projects is a case in point.

Employment in the U.S. is far below its pre-recession levels, and employment in the construction sector has been hit particularly hard. So there is a strong case to be made for a U.S. program of infrastructure spending -- and many U.S. observers are making that case.

Neither of these conditions holds in Canada. Although unemployment rates have yet to return to pre-recession levels (see here for an explanation for why progress is so slow), the number of jobs lost during the recession has been recovered, and July employment levels were 1 per cent above their pre-recession peak.

When it comes to employment in the construction sector, the contrast is even starker. U.S. construction employment is still 30 per cent below its 2006 peak, while Canadian construction employment is 3 per cent greater than it was before the crisis; see the accompanying graph.

Calls for a renewed infrastructure stimulus program in Canada are clearly premature -- there simply isn't much in the way of idle resources in the construction sector that governments could call upon to get it underway.

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