It should be bipartisan in nature so that the plan is viewed as sustainable across the political cycle. 2  BIS central bankers’ speeches  Meanwhile the crisis in the eurozone has resulted in a sharp slow-down in economic growth in Europe and tighter financial conditions globally. It has hurt U.S. consumer and business confidence and is already a material drag on U.S. growth. Economic momentum in many other regions of the world has also slowed somewhat and this is also restraining the demand for U.S. exports. Assuming that Congress avoids the fiscal cliff and European leaders successfully manage through their challenges, there are solid grounds for expecting that growth will gradually strengthen in coming years. U.S. banks are healthier and credit conditions, while still tight, are gradually easing, the housing sector is showing early signs of recovery, and households appear quite far along in the deleveraging process. On the inflation side, we have succeeded in delivering inflation very close to our 2 percent price stability objective. Over the past year or so, price trends have been a bit stickier than one might have anticipated given the large amount of slack in the economy. To some degree, this likely reflects earlier upward pressures on commodity prices, the anchoring exerted by stable inflation expectations, and the stickiness of nominal wages. With gasoline prices now falling sharply and upward pressures from apparel prices now appearing likely to dissipate, I expect that inflation will decline a bit in coming months, falling somewhat further below our 2 percent objective.
High unemployment and low labor force participation are especially serious problems for young workers and are perhaps the clearest evidence that Puerto Rico needs to make better economic progress. Many of the current problems facing Puerto Rico relate not just to cyclical weakness but to deeper structural challenges. This brings us to the subject of the report we issued today. I do not presume that this report is the last word on these important questions. We do not presume to claim that we have all the answers. Rather, I hope that it is the start of a constructive and bipartisan debate that will advance good public policy and a better future for the people of Puerto Rico. I also hope that it will be read and considered beyond the business and government community, across the society at large. The goal we seek is not simply business success and expansion, but broad-based prosperity with rising standards of living and greater opportunities for all Puerto Ricans. I want to thank you again for the opportunity to address the Chamber. Jamie McAndrews, executive vice president and director of research, will now talk about the report we released and lay out its findings and recommendations. 4  BIS central bankers’ speeches