New Jersey

Good afternoon. I am pleased to be here today at Rensselaer Polytechnic Institute (RPI). It is always a pleasure to speak with members of the different communities that make up our region, and it is particularly exciting to have the opportunity to speak with the students and faculty here at the Lally School of Management and Technology. Much of my day in the Albany area has been focused on the intersection of technology, the workforce and innovation, so it is a pleasure to speak with the people who are the future leaders in this fascinating evolution. My meeting with you today is part of our continuing efforts to understand what is going on at the grassroots level of our economy. Earlier on this trip, I met with government and business leaders to learn about some of the challenges the region faces as well as the collaborative efforts being taken to further economic development. I listened to community leaders describe the problems in affordable housing, workforce development and employment facing many in the lower income communities. I was also impressed by the potential innovations in energy production at the GE Global Research Center. These could have large consequences not only in the United States but in developing nations as well. We plan these trips so I can meet with a diverse array of representatives. This allows me to get a comprehensive picture of economic conditions in the region and a fuller understanding of the major issues and concerns. This is our fifth trip to Upstate New York in the past few years. Other recent trips have taken us to Northern New Jersey, the boroughs of New York City, Long Island and Fairfield County, Connecticut. My outreach trips complement the ongoing efforts of the New York Fed to assess conditions in the Upstate New York economy and throughout our District. We monitor economic performance on a monthly basis through special indexes we have created and through our monthly surveys of New York State manufacturers and business leaders in the non-manufacturing sector. We also get important input on economic conditions from our Upstate Advisory Board, whose members play important roles in the Upstate economy. We conduct a biannual poll of small businesses to understand their credit needs and availability. The results of one particular poll led us to develop a series of clinics for small businesses to help them take the next step to access capital and identify new sources of funding. We have constructed a consumer credit panel that allows us to better understand the financial condition of U.S. households and students. More recently, we extended this national analysis to include more detail about the states in our district, including a profile of households in New York State and the Albany area. We look at how much consumers are borrowing, what they are borrowing for and if they are experiencing difficulties in making their payments. As I mentioned earlier, we are always eager to engage with students, and our commitment to the region includes a number of educational programs worth highlighting. First, Math x Economics, which encourages students attending schools serving lower-income families to consider a career in finance or economics. And, second, our yearly Fed Challenge competitions, in which teams of students from high schools and colleges in the District take on the roles of the members of the Federal Open Market Committee (FOMC) and debate what the appropriate next step is for U.S. monetary policy. All in all, there is a lot to keep myself and my colleagues fully engaged with the communities we represent. Let me now review recent developments in the national and regional economy, and at the end of my talk, I will be happy to answer questions you may have about the economic outlook. 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. National Economic Conditions Since the official end of the Great Recession more than five years ago, the U.S. economy has grown at a disappointing 2.2 percent compound annual rate. Several times over that period it looked as though growth was breaking out on the upside, but each time such hopes were dashed. We are again at a similar junction. A wide array of economic indicators now suggest that growth in the U.S. has picked up and is widely expected to be around 3 percent during the second half of 2014 and in 2015. These forecasts seem quite reasonable to me and are consistent with views I have expressed in the past. Various “headwinds” have been impeding economic activity, but some of these forces have gradually subsided, allowing the substantially improved underlying fundamentals to exert themselves more forcefully. For example, fiscal restraint, which was a big factor last year, has subsided and is likely to disappear altogether next year. Credit a

• published: 09 Oct 2014
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