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 0 -2 -4 -6 -8 2019  2020  Sources: Statistics Canada and Bank of Canada calculations  2021  2022 Last data plotted: 2022Q4  -7-  This picture of excess demand in the economy is reflected in a wide range of labour market indicators.