U.S. Debt Default: 6 Ways Canada Would Be Impacted (PHOTOS)

The Huffington Post Canada     First Posted: 07/27/11 09:14 AM ET   Updated: 09/26/11 06:12 AM ET

Most experts agree that the likelihood of a U.S. debt default is slim. But if it happens, average Canadians could experience a shift in everything from their buying power to their job prospects. Canadians may be surprised to know that it’s not all bad news. Here’s a preview of what continued unrest in Washington could mean for you.

1. The value of our dollar
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The Canadian dollar surpassed $1.06 (U.S.) against the greenback Tuesday, not far off historic highs. And if Washington doesn't reach an agreement over the debt ceiling before its bills come due, economists say the loonie could soar even higher -- at least in the short term. As University of Toronto economist Jack Carr explains, the perception among international investors of the Canadian dollar as relatively risk-free is a large part of what has been sending its value skyward. "It used to be that the primary [safe haven] was the U.S. dollar, and the secondary was the Euro," he says. But according to BMO Chief Economist Douglas Porter, if the crisis were to deepen -- or if a U.S. debt default occurred -- the strength of the loonie (and the increased buying power for consumers) would fade. "If there is real economic damage done to the global economy, that would undercut commodity prices, which in turn could lead to a weakening of the Canadian dollar," he says.
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