Since then growth has been somewhat softer than anticipated, with real gross domestic product (GDP) increasing at only a 1.8 percent annual rate in the first quarter of 2011. A number of factors contributed to the slowdown. Construction activity fell – likely reflecting the continued large supply of unsold homes – and government expenditures at the federal, state and local levels declined. In addition, real, or inflation-adjusted, consumption growth in the first quarter was slower than in the last quarter of 2010. This occurred, in part, because of the rise in gasoline and food prices that pushed up consumer price inflation last quarter and reduced discretionary income. The rise in energy prices contributed to a fall in consumer confidence, which also may have had a negative impact on consumer spending. However, the weakness of real GDP growth in the first quarter probably will prove temporary. In particular, production and business survey indicators, including the New York Fed’s own Empire State Manufacturing Survey, generally continue to signal strength. And financial conditions continue to improve. The temporary reduction in payroll taxes and other fiscal measures also are providing support to demand. In addition, demand abroad – particularly in Asia – remains robust, supporting our exports. Most importantly, the labor market has shown further improvement, as demonstrated by today’s employment report. Although payroll employment growth has been subdued during most of this recovery, the latest figures show the economy added 244,000 jobs in April – and an average of 233,000 over each of the past three months.
William C Dudley: Regional economy and current trends in regional employment Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Quarterly Regional Economic Press Briefing, New York, 6 May 2011. *  *  *  Good morning and welcome once again to the New York Fed’s Quarterly Regional Economic Press Briefing. I am pleased to have this opportunity to talk with the journalists covering our region – and through you, to the people in our District. This morning I will discuss national and regional economic conditions, with particular attention to employment trends in the Second Federal Reserve District, which covers New York; northern New Jersey; Fairfield County, Connecticut; Puerto Rico; and the U.S. Virgin Islands. I will not comment on the outlook for monetary policy today but instead will focus on the economy itself. Following my remarks, my colleagues will provide more detail. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. National economic conditions I’ll begin by commenting on national economic conditions. Since the recession ended in 2009, the economy has grown at a modest pace. When we met in February, the brisker pace of growth in the last quarter of 2010 appeared to be carrying over to the beginning of this year.