While the Canadian economy fired on all cylinders in 2017, the pace of growth tapered off toward the end of the year, according to The Conference Board of Canada. Its latest Canadian Outlook expects the slowdown to continue this year, with the economy forecast to expand by a more sustainable 1.9%, down from 3.0% in 2017.

Additionally, tighter labor markets and increased retirements from baby boomers will lead to much slower employment growth in 2018. Job gains are expected to slow to 232,000 jobs in 2018, down from 336,900 last year. On a more positive note, a tight labor market will help support wage growth which could help cushion the impact of rising interest rates.

“Rising interest rates, moderating employment growth, and high household debt will force consumers to reduce their pace of spending this year,” said Matthew Stewart, director, national forecasting, at The Conference Board of Canada. “The hope that trade and business investment would pick up the slack is unlikely to come to fruition as uncertainty surrounding NAFTA negotiations and the possibility of increased tariffs are challenging businesses and exporters alike.”