To this day, I can probably tell you as much about Benito Juarez, journalist-turned-jurist-turned-president Jose Maria Iglesias and other Reformistas as I can about Houston or Lamar or Washington or Lincoln.1 Alejandro and Rosa Laura, seeing you tonight has revived school-day memories of some 53 years ago! It is a delight and honor to be with you. I will do two things tonight. First, I will give you an update on the performance of the Texas economy and what lies ahead. Second, I will give you my personal view of what the Federal Reserve’s Open Market Committee – the FOMC – announced after our meeting last week. Then, time permitting, I will be happy to avoid answering any questions you might have. An update on the Texas economy The economic performance of Texas since December 2007 – the beginning of the U.S. recession, according to the National Bureau of Economic Research – can be summarized with the chart being projected on the screen denoting employment growth in the 12 Federal Reserve districts. The Federal Reserve Bank of Dallas and its branches in Houston, San Antonio and El Paso administer the business of the Eleventh District (depicted by the red line), which includes Texas, northern Louisiana and southern New Mexico; 96 percent of the economic production of my district comes from the 25.7 million people of Texas. In 2011, Texas created 211,600 jobs. We now have more people at work than we had before we felt the effects of the Great Recession in the United States.
At the same time, we stated that we cannot specify an exact goal for employment because “the maximum level of employment is largely determined by nonmonetary factors that affect the structure and dynamics of the labor market” and that “change over time and may not be directly measurable.”7] In the aviary of monetary policy makers, I am considered a “hawk.” I respect the fact that the Congress of the United States has given the Federal Reserve a dual mandate of conducting monetary policy so as to have full employment and simultaneously maintain stable prices. I believe monetary policy is the principal determinant of long-term price stability. But I have long maintained that monetary policy is but one gear in the complicated gearbox that drives job creation. Education and other structural aspects of our economy condition the nation’s job-creating capacity; fiscal and regulatory policy, in turn, condition both the structure and dynamics of employment. I was delighted that the full committee recognized this and made it part of its official credo. In a world driven by rapid technological change and globalization, job-creating capital will flow not only to countries that conduct sound monetary policy but to places with the most welcoming, competitive tax and regulatory systems. This was underscored in a recent Harvard Business School (HBS) survey authored by Jan Rivkin and Michael Porter, two widely admired scholars on national competitiveness and economic development.