An Economic Omen on the Eve of WHTI

WHTI goes into effect this Monday, the initiative meant to add an extra layer of security to the Canada/US border. What many critics of the program see is an initiative that will hurt relations and the lucrative cross border economies that have been established over years of good will.

Unfortunately, new numbers published by CBC today suggest that we don’t need to wait for June 1st to get an idea of what sort of economic impact WHTI will have. The article gives statistics for the first quarter of 2009:

Canadians spent $3.6 billion in the US, down 9.1% from 4th quarter 2008 and down 12.1% from the same period last year.

Americans spent $1.8 billion in Canada, down 7% from the previous quarter; the lowest since 1997!

Same-day car trips to Canada by Americans fell to 2.2 million, down 1.8% from the previous quarter; overnight trips were down 3.4% to 3.1 million.

What we see is that there’s already a decline in cross border travel and spending from both sides…and that’s without the extra document requirements set to go into action on June 1st. Some might suggest that this wouldn’t be an issue if the recession hadn’t hit…but the reality is that the recession did hit, and that the WHTI is just going to add to the negative atmosphere of border economics.

Interestingly, the CBC article mentions another stat: Canadians spent 4.1% more ($3.2 billion) to the previous quarter in countries other than the US.

So let’s recap:

- Canadians are spending less in the US
- Americans are travelling and spending less in Canada
- Canadians are spending more in foreign countries excluding the US

And on June 1st, WHTI goes into affect.

Any bets on what the stats for the second and third quarters of 2009 will look like?