A number of you, including Ken Rogoff, have shown that downturns associated with banking crises tend to be the most severe, and that clawing back lost employment and output in the aftermath of a financial crisis is most vexing. My colleague Mark Wynne, who directs our Globalization and Monetary Policy Institute, has written an excellent brief on this for our Economic Letter publication, which should be posted on our website today. BIS central bankers’ speeches  3  This chart of output relative to precrisis trend summarizes Mark’s conclusion: Since the onset of the financial crisis in 2008, “performance of real GDP in the U.S. is almost exactly in line with what we might have expected based on the average experience of other countries that have gone through banking crises.”1 This chart is most definitely not a pretty sight. Small wonder that American consumers – and the businesses that hire and serve them – remain in a defensive crouch. The question is: How do we change the picture? How do we get the pistons of job creation, income growth and wealth restoration pumping again? This is the gist of the discussion at the FOMC table. The press and others delineate the viewpoints around the table on an ornithological scale, dividing us up into doves and hawks. I am classified according to that delineation as a hawk. I am not offended by this, but, not unlike the stereotyping of Texas, I consider it simplistic.
Second, I’m guessing you are looking for some insight into what the Federal Open Market Committee (FOMC) is going to do next, insight Chairman Bernanke, as leader of our pack, wisely avoided imparting in his recent comments. The Texas economy On the Texas front, my colleagues and I at the Dallas Fed have lately been deluged with requests for data on all aspects of the Texas economy – which accounts for 95 percent of the Eleventh District’s output and the economic activity of some 25 million of the 27 million people living in our district. If you are interested, you can go to our website (www.dallasfed.org) to receive a factual, nonpoliticized brief on the Texas economy, including the job creation figures that get bandied about in debates among presidential  BIS central bankers’ speeches  1  aspirants. We update these numbers monthly – the data for the August employment figures will be tabulated on our website on Sept. 19 – and we will keep updating them so that analysts can parse the data. At a minimum, I am hopeful our web postings will help you separate spin from reality and fact from fiction, as well as dispel some of the stereotypes of Texas. For example, we are blessed with abundant natural resources here, and we most definitely do benefit on net from high commodity prices; oil and gas extraction contributes about 9.5 percent to state output.