Rather, the headwinds facing consumers and businesses are even stronger than we had thought. Against this backdrop, the outlook has weakened substantially. Last June my colleagues on the FOMC and I were projecting real GDP growth would be around 2-3/4 percent in 2011 and 3-1/2 percent in 2012. As I alluded to a moment ago, some of the recent incoming numbers – on manufacturing activity and automobile sales, for example – have improved. Even so, our latest forecast made in early November revised down our outlook for 2011 by a full percentage point and projected GDP growth at just 2-3/4 percent in 2012 – barely above most analysts’ views of the potential rate of output growth for the economy. Such growth  BIS central bankers’ speeches  1  rates certainly are not strong enough to make much of a dent in the unemployment rate and other measures of resource slack. Indeed, the FOMC’s latest forecasts are for the unemployment rate to remain above 8-1/2 percent through 2012 and to fall only to about 8 percent in 2013. Without new developments or changes in policy, I don’t believe the U.S. economy is poised to achieve escape velocity anytime soon. Inflation outlook under 2 percent What about inflation? Large increases in energy prices pushed headline inflation – as measured by the 12-month change in the total Personal Consumption Expenditures Price (PCE) Index – up from about 1-1/4 percent last fall to almost 3 percent this summer. These higher prices certainly took a bite out of households’ budgets.
And second, what about the readiness of other payment instruments, in particular payment cards? Let me first give you my views on the readiness of the customer. Readiness of customers? A parallel can be drawn with another major project, namely the changeover to the euro notes and coins in 2002. Indeed, as with SEPA, many of the preparations for the euro changeover were not visible to the citizens, as they were carried out by technical experts. Furthermore, the banknotes’ security features were disclosed only four months before the launch. As with SEPA, it was difficult to predict how the customer would react. On the other hand, well before the euro changeover took place, the central banking community discussed customer readiness in depth with the aim to ensure acceptance of the euro notes and coins. Well in advance of 2002, the Eurosystem started organising a “partnership programme” that involved the main bodies in the various sectors. This partnership programme emerged from the “megaphone idea” and the understanding that communication on the changeover to the euro had to be at national level by the national public authorities, banking communities and end-user associations. Each sector was encouraged to inform their target groups. Indeed, as if with a “megaphone”, the Eurosystem passed on a common set of key messages to target groups, and they in turn passed on the information to others. Applying the principle of subsidiarity in this context proved itself as the correct way to deal with differences in culture, language and institutional setting.