Over the past several years, during both recession and recovery, these sectors have added about 1,000 jobs each year to the local economy. The leisure and hospitality sector,  4  For more thoughts on the monetary policy outlook, I refer you to the speech made earlier this week: Reflections on the Economic Outlook and the Implications for Monetary Policy. 4  BIS central bankers’ speeches  as well as the retail sector, has also been a solid source of job growth for the area. However, as you probably well know, job losses in the region’s manufacturing industry have weighed against these gains. About 9,000 manufacturing jobs have been lost since the start of the Great Recession. And, while a slow jobs recovery began in the nation’s manufacturing sector in 2010, Syracuse has continued to lose these jobs in recent years – a painful process for the area to continue to endure to be sure. Nonetheless, these trends have resulted in a more diversified economy. In fact, the share of workers employed in the metro area’s manufacturing sector is now just 8 percent, just below the nation’s 9 percent share. The private education and health sectors have emerged as the largest industries, and now employ one in five workers. So, the face of the local economy has changed dramatically through a somewhat painful restructuring process. But I believe this process is reaching its conclusion, and the resulting more diversified local economy is providing a strong foundation on which Syracuse can build going forward.
Using an alternative measure, the employment to population ratio, which is not influenced by changes in the number of discouraged workers, there has been limited improvement in labor market conditions. Job loss rates have fallen, but hiring rates remain depressed at low levels. Taken together, the labor market still cannot be regarded as healthy. Numerous indicators, including the behavior of labor compensation and household assessments of labor market conditions, are all consistent with the view that there remains a great deal of slack in the economy. That being said, I see persuasive evidence of improved underlying fundamentals for much of the private sector of the U.S. economy. Key measures of household leverage have declined and are now at the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining liabilities. Banks are beginning to ease credit standards somewhat after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, light-weight motor vehicles sold at a seasonally-adjusted annual rate of 15.3 million in May, not far from the 16.1 million sales in 2007. Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade.