RE:What Does the Bank of Canada Do? Hi Experienced. I agree with your assessment on the Canadian economy but let me address the US for a sec. It is difficult for the US to enter a recession if they continue to increase the deficit. As I mentioned before, deficit spending is inflationary and as long as the Government continues to spend beyond the natural growth rate of the economy, inflation will NOT return to 2%. In other words, Jerome Powell would have failed in telling the American people that we need to restore price stability and bring inflation back to the 2% target. I suppose they can always say, "3% is good enough" but I have my doubts.
My base case has always been that the US will enter a recession (at some point) because deficit spending cannot continue at this rate. If the US avoids a recession (this cycle) then they're kicking the can down the road with larger and larger government deficits that future generations have to pay for.