While private consumption and investment thus appear to be on reassuringly solid trajectories, growth in government expenditures on goods and services is likely to remain tepid.
Second, policy itself has been improved by the forward-looking framework of inflation targeting, which has allowed Canada to avoid the major boom and bust cycles experienced in the period from the late 1960s to the early 1990s by reacting promptly to new information. In particular, when there are demand shocks, the inflation-targeting framework acts as an automatic stabilizer for the economy.