interest - rate - sensitive areas, but higher borrowing costs are starting to affect spending more broadly as well. consumption growth looks to have weakened substantially in the second half of 2022 ( chart 3 ). some of this slowdown reflects the waning boost from the reopening, but higher interest rates have contributed. chart 3 : consumption is easing amid higher rates goods and services consumption, growth over 2022h1 and 2022h2, annualized data % - 3 goods consumption services consumption, including npish 2022h1 2022h2 note : 2022q4 is forecast. npish means non - profit institution serving households. sources : statistics canada and bank of canada calculations and projections last data plotted : 2022q4 demand and supply with demand slowing, we are seeing early signs that demand and supply are becoming less out of balance in our overheated economy. the output gap provides an overall measure of the balance between demand and supply. through 2021, the economy recovered rapidly — the fastest recovery on record — and supply disruptions continued. as a result, the economy moved into excess demand in 2022, putting upward pressure on prices here in canada. but excess demand appears to have peaked and is beginning to ease ( chart 4 ). chart 4 : the economy remains in excess demand output gap, january 2023 bank of canada monetary policy report - 2 - 4 - 6 - 8 sources : statistics canada and bank of canada calculations last data plotted : 2022q4 this picture of excess demand in the economy is reflected in a wide range of labour market indicators. the unemployment rate is near historical lows, businesses continue to report widespread labour shortages, and the job vacancy rate is elevated. 2 labour markets were already tight before the pandemic, but now the unemployment rates for prime - age, young and older workers are all lower than they were before the pandemic. the unemployment rate today is also lower in every province than it was pre - pandemic. quebec and british columbia have the lowest unemployment rates of all. the tightness in the labour market looks to have peaked around the middle of 2022 and has eased modestly. job vacancies have declined from that peak, and the share of firms facing labour shortages has edged down. moreover, job growth has been slowing more in interest - rate - sensitive sectors like construction, and this has contributed to a slowing in overall employment growth ( chart 5 ). chart 5 : employment growth has eased in sectors

there is a desire for reforms to go much further. this is expressed by well - regarded experts such as paul volcker, martin hellwig, as well as by nobel prize winners joseph stiglitz and eugene fama. between these two positions there is also a third one. its proponents firmly believe that the current reform projects will eliminate the existing shortcomings of the regulatory framework and that the reforms therefore have to be completed. after that, we should monitor how the new rules work in practice before thinking about new regulatory projects. behind that third position is where i align myself. as i see it, it is totally right that we cannot leave it forever and a day to finalise the reforms. by the same token, i firmly believe that we have to bring the current reforms to a reasonable conclusion. only then can we create a consistently stable regulatory framework which lessens the probability of future crises. i think bis central bankers ’ speeches that the time frame agreed by the basel committee and the g20 heads for completing the reforms by the end of this year is appropriate, reasonable and necessary in order to be able to present a convincing outcome. we shall complete it in 2016 – anything that does not undergo reform will stay at the present status quo. 3. financial crises come at a cost before talking about the reforms and their implications, i would like to state something unequivocally : financial crises come at a cost – at a very high cost in fact. that is not a myth, it is a fact. the fact that financial crises come at such a cost is now even something of a platitude. in other words, it is an insight that is basically of no particular value, since everyone knows it anyway. but, unfortunately, it is still something that people dismiss from their minds too often when fiscal policy and regulatory decisions are under discussion. just think of the global financial crisis of 2008. the costs of that crisis were simply enormous. between 2007 and 2014, the sovereign debt of the developed g20 countries went up from about 70 % to roughly 105 % of gross domestic product. 1 unemployment, too, in those countries increased on average by more than two percentage points. the preceding excesses of the financial sectors thus did lasting damage to economic growth potentials. and the realisation that the enormously high costs of financial crises are socialised is a fundamental given. taking a historical perspective, three years after a banking crisis public debt is on average 86 % higher than before.