Review of 2001 A confluence of factors shaped economic developments last year, and I would first like to review these factors, to provide a backdrop for assessing our economic prospects in the coming year. A year ago, signs of the recession that eventually unfolded were just beginning to materialize. After several years of booming growth, economic indicators started sending mixed signals.
Although consumer sentiment had dropped around the end of 2000, consumers were still spending at a healthy clip. While consumption growth had decelerated somewhat over the previous year, the modest slowing was consistent with the deceleration of aggregate demand necessary to better align supply and demand. Businesses, however, appeared to be struggling.