While the future path  BIS central bankers’ speeches  5  of policy is not on a pre-set course and must remain data dependent, we will strive to be similarly effective in our communications going forward. As you know, we’ve taken a number of steps in recent years to increase transparency and improve our communications. This includes regular press conferences by the Fed chair following FOMC meetings; the publishing of growth, inflation, unemployment and federal funds rate projections by FOMC participants; a concerted attempt to lay out the guideposts that the FOMC will look at to assess progress toward our mandate; and an equally concerted attempt to lay out how our various policy tools―such as interest on reserves, overnight reverse repurchase (ON RRP) operations and reinvestment of principal payments from our asset holdings – will be used to pursue our objectives. We are also working to be better stewards in safeguarding financial stability. Simply put, we failed to act early enough and decisively enough to stem the credit excesses that spawned the financial crisis and Great Recession. The U.S. was not alone in this shortcoming, but, given our position in the global financial system, we should have done better. We’ve taken important steps through new legislative mandates and a broader effort to rethink our regulatory and supervisory framework. In particular, systemically important banking organizations must now hold capital and liquidity buffers that are better aligned with their risk profiles.
In assessing the current state of the U.S. economy, there are divergent signals, with weakness in some spending and production indicators, but robustness in a number of labor market indicators. In the fourth quarter, investment spending for both equipment and structures fell, and net exports and inventory investment were drags on growth. These developments partly reflect the slowing of global growth and the impact of the dollar’s appreciation since mid-2014. This weakness has been particularly evident in U.S. manufacturing. However, the latest ISM non-manufacturing index suggests the possibility of a slower pace of growth also in the  1  Matthew Higgins, Jonathan McCarthy, Paolo Pesenti and Joseph Tracy assisted in preparing these remarks. BIS central bankers’ speeches  1  services sector, which has been relatively robust. Consumer spending growth – which had been a brighter spot for most of 2015 – also slowed notably in the fourth quarter. In contrast, the U.S. labor market has remained healthy and supportive of growth. Over the course of 2015, payroll employment increased an average of about 228,000 per month. Although the January increase of 151,000 was below last year’s pace, other aspects of the report were strong. The January data indicated substantial gains in wages and hours worked, which implies healthy real income growth for the household sector. Moreover, the amount of slack in the labor market continues to diminish based on a number of measures. The unemployment rate declined to 4.9 percent.