We need more investment in health, in education—especially in the earliest years—in infrastructure, and in training and skills for well-paying jobs. There is so much work that needs to be done to make sure that we are fostering an equitable recovery and ensuring that everyone is able to fulfill their economic potential. That’s why at the New York Fed and across the Federal Reserve System, a key area of focus is to better understand what contributes to economic inequities and to finding solutions.3 Our economic research and analysis, which my colleagues will share shortly, highlights many of these stark disparities.4 In addition, hosting conversations like this one creates dialogue around these issues and builds connections between those working for change. 1/2  BIS central bankers' speeches  Another important role the Federal Reserve plays in promoting economic equity and access is supervising banks with respect to the Community Reinvestment Act. This law requires banks to lend, invest, and offer services to low- and moderate-income communities in areas where the banks operate. To emphasize all of our work in this space, the New York Fed recently published a statement reinforcing our commitment to fostering a more equitable economy and society:5 The New York Fed stands in unity with all those who oppose racism, hate, and violence. We join them in a shared desire to root out the intolerable inequities and injustice grounded in systemic racism that persist in our society.
There are no sharp dividing lines between these horizons. Nonetheless, the time horizon imposes various requirements on economic theory and models for our purposes. The starting-point for the analyses is important. Current statistics and anecdotal information can serve as a basis for providing some indication of how the economy has evolved up to the present. But the information set is uncertain. Statistics are published with a lag and are often revised. Data from different sources can provide different pictures of the situation at hand. Statistical models can provide us with good support and help distinguish between news and noise in the data. They can capture time series properties in data and correlations that in many cases will be able to produce good forecasts of developments in the months ahead. There are certain similarities between projecting developments in the Norwegian economy in the coming months and forecasting the weather. Meteorologists have observed that averaging forecasts from a large number of models generally produces more accurate forecasts. To project consumer price inflation in the coming quarters, the Bank has developed a system for averaging forecasts from about 170 different statistical models, all of which are intended to project inflation in the Norwegian economy in the very near term.3 The model weights are determined on the basis of historical accuracy and are continually adjusted so that models with better predictive power are given greater weight in the  3  The models are grouped into three classes: factor models, indicator models and VAR models.