Binghamton, on the other hand, has really been struggling with no signs yet of any meaningful recovery. Meanwhile, Northern New Jersey’s economy had been growing fairly steadily until this past winter when activity softened, probably due at least in part to the unusually harsh weather. Now that spring is finally upon us, we hope to see economic conditions improve more significantly. What kinds of jobs have been created during the recovery? Let me turn to the topic of today’s press briefing: how the types of jobs in the region have changed over the last business cycle. Firms often change the way they utilize workers and the mix of skills they employ during recessions and recoveries. The weakening demand during recessions forces firms to look for new ways to be more efficient to cope with hard times. These adjustments do not affect all workers equally. Indeed, it’s what we typically think of as middle-skilled workers – for example, construction workers, machine operators and administrative support personnel – that are hardest hit during recessions. Further, a feature of the Great Recession and indeed the prior two recessions, is that the middle-skill jobs that were lost don’t all come back during the recoveries that follow. Instead, job opportunities have tended to shift toward higher- and lower-skilled workers. As we’ll show, these same trends have played out in our region. While there’s been a good number of both higher-skill and lower-skill jobs created in the region during the recovery, opportunities for middle-skilled workers have continued to shrink.
2/5  BIS central bankers' speeches  Stage 2: Normalization The second stage of normalization followed lift-off and has involved two processes: 1) raising the federal funds target closer to more normal levels, reflecting the ongoing improvement in the economy, and 2) gradually reducing the Fed’s balance sheet as we work to unwind the asset purchase policies put in place during the crisis. Let’s start with interest rate normalization. Since lift-off, we’ve raised interest rates as the economy moved toward maximum employment and our 2 percent longer-run inflation objective. We continued this process with our most recent rate increase this week.4 Throughout, we’ve repeatedly stressed that we foresaw this to be a process of gradual normalization, reflecting the balancing of risks to reaching our goals. In particular, downside risks to the achievement of our employment and inflation goals amid very low interest rates were compelling arguments for a cautious and relatively predictable approach to policy. This approach proved its worth: The economy continued to expand at a healthy pace even as the Fed raised rates numerous times. I’ll now turn briefly to the normalization of the balance sheet. We began this process about a year ago.