I predicted that the economy would gradually make its way “home,” which lies at the intersection of 2 percent inflation and full employment. We arrived in 2014, but then oil prices collapsed, forcing a detour. For much of 2018–19 though, the economy was operating near its full capacity with inflation very close to target. And then came COVID-19.
The good news is that we began this episode with a healthy economy, inflation on target and the unemployment rate at its lowest in 40 years. Just as a healthy, fit individual is more likely to shake off COVID-19, so is the Canadian economy.