The Federal Reserve contributes to the nation’s economic performance in part by using monetary policy to help achieve our mandated goals of maximum employment and price stability. But success in promoting these objectives does not, by itself, ensure a strong pace of long-run economic growth or substantial improvements in future living standards.
The most important factor determining continued advances in living standards is productivity growth, defined as the rate of increase in how much a worker can produce in an hour of work. Over time, sustained increases in productivity are necessary to support rising household incomes. Here the recent data have been disappointing.