BIS central bankers’ speeches  1  Now I would like to review recent developments in the local and national economies, and at the end of my talk will be happy to answer any questions you have. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee. Regional employment and economic trends First, let’s talk about economic trends in New York City. The City’s economy showed resilience both during and after this last severe recession. Payroll employment fell sharply in 2008 and 2009; it bounced back, slowly at first, but by July of 2011, the City’s economy had recovered to its pre-recession employment peak and, in November, it eclipsed its previous all-time peak of 1969. Since then, employment has continued to grow strongly, rising at a roughly 2 percent annual pace and outpacing the national growth rate. The demand for labor has been driven by start-ups, tech, health care and business services. While Superstorm Sandy caused substantial damage to homes and the region’s infrastructure and severe economic disruptions in late 2012, the local economy as a whole bounced back quickly. Despite the robust job growth, the unemployment rate among City residents has been persistently high – though it did fall to 8.0 percent in December, nearly a 5-year low.
This forecast is based on the projected gradual increase in the levels of resource utilization, a firming in global demand, and the upward pull exercised by stable inflation expectations on actual inflation. Underpinning the latter assumption is the broad stability of long-term inflation expectations across different financial and survey measures, combined with ongoing moderate growth of wages and unit labor costs – all observations consistent with anchored inflation expectations. Overall, I would characterize the outlook as reasonably favorable. But I would very much prefer faster economic growth and more rapid progress towards our dual mandate objectives of maximum sustainable employment and price stability. Hence, the continued need for monetary policy to remain highly accommodative to support the economic recovery to the fullest. Thank you for your kind attention and I will now be happy to take some questions. BIS central bankers’ speeches  5