Regional economic conditions The financial crisis underscored the fact that the world is a complicated place and that the insights of professional economists and financial experts must be supplemented with a broader set of perspectives from households and businesses. Today’s visit is in that spirit – I want to talk about what we are seeing in the economy but also to hear from you firsthand about your assessment of economic conditions. So what do we see? Let me start with basic economic characteristics. While Staten Island is the city’s least populous borough, its population has grown steadily and rapidly, more than doubling in the last half-century to close to one-half million residents. On its own, Staten Island is larger than all other cities in the entire New York–New Jersey region, with the obvious exception of New York City. BIS central bankers’ speeches  1  In many ways – homeownership, educational attainment, income, and demographics – Staten Island more closely resembles the nation than the rest of New York City. For example, the homeownership rate on Staten Island is almost 70 percent, well above the 30 percent average homeownership rate citywide. Still, with a sizable proportion of the borough’s workers commuting to Manhattan (about ¼ of the island’s workers or more than 50,000 people) Staten Island’s economy is closely tied to the rest of the city’s economy, as well as to northern New Jersey’s. Thus, when Manhattan sees brisk job growth, the residents of Staten Island have better opportunities.
It is still not wholly clear - to me at least - quite why the storm struck suddenly when it did. Most crises of this sort have their origins in some evident macro-economic policy failure. At least in hindsight there are usually fairly clear tell-tale signs of expanding fiscal deficits and/or lax monetary policies, classically accompanied by evidence of imbalance in the form of accelerating inflation or a rapidly deteriorating balance of payments. There were such signs, perhaps most notably in Thailand; but they were not for the most part particularly pronounced in Asia. Some of you perhaps understand better than I do why the initial infection proved to be so contagious. It was after all your money! In fact through the first half of the 1990’s, and in some cases for much longer, the countries in question had been remarkably successful. They attracted, by their very success, huge inflows of capital from the rest of the world, where yields had fallen, in the hope of achieving higher returns. There is no question that this capital inflow made a very big contribution to the remarkable economic expansion in Asia and hence to the global economy; but with the benefit of hindsight, the accelerating scale of the inflow, and particularly the forms that it took, became an important part of the problem. It was not all in the end productively employed.