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Speech
Early Childhood Development and Economic Growth
Early childhood development may seem like an odd topic for a Federal Reserve Bank president.1 The public policy responsibility for which the Fed is best known is the nation’s monetary policy – a macroeconomic subject that would seem to stand in sharp contrast to the more microeconomic focus of Governor Kaine’s summit today. But as a regional Reserve Bank in a federated central banking system like the Fed, we spend a good deal of time trying to understand the economies that make up our District, which, as you may know, includes Maryland, Washington, D.C., Virginia, West Virginia and the ...
Speech
Starting Early in Workforce Development
College-educated workers earn significantly more and are much less likely to be unemployed than workers without a college degree. Over the same period that the gap in earnings has increased, manufacturing employment, which used to employ many workers without a college degree, has decreased.Evidence on the effectiveness of many traditional workforce development programs is mixed, with modest positive results at best. One reason might be that many programs are reaching workers later in life, when they may not have time to recoup large investments in their human capital.There is increasing ...
Speech
"Prudential Stress Testing in Theory and Practice: Comments on 'Stressed Out: Macroprudential Principles for Stress Testing'"
I am pleased to have this opportunity to be with you today to discuss stress testing. In the wake of the housing bust and subsequent financial turmoil, the regulation and supervision of financial institutions and markets has been the subject of intense scrutiny. The 2009 U.S. stress tests appeared to play a critical role in the resolution of the crisis, which has led to recommendations that such tests, with appropriate refinements, be made a routine component of the supervisory regime for large financial institutions. Indeed, as the authors note, the Dodd-Frank Act mandates annual stress ...
Speech
Retail Financial Innovation
Over the last two decades, we have witnessed what can arguably be called a revolution in retail consumer finance. Perhaps the hallmark of this revolution has been the dramatic expansion of unsecured lending through the proliferation of credit cards. This growth has not been limited to unsecured credit, but also includes mortgage and home equity lending. One of my themes this morning will be that these trends are the result of a wave of innovation, largely related to information technology, that has brought widespread change to financial services and other industries. At the same time, as ...
Speech
Economic Education: Making the Half-Truths Whole
Ladies and gentlemen, it is a pleasure and a privilege to address you today, both for professional and personal reasons. On the professional side, economic education is a subject close to my heart. There are few higher callings in this life--at least from the perspective of a professional economist and policymaker like me--and I can't overstate the importance of your work. In today's world, our nation's economic policies can either unleash the creative energies of average citizens and raise the quality of our lives or do the opposite--often with astonishing force and speed. Poor economic ...
Speech
Inflation and Unemployment
I recently had the opportunity to guest-teach a couple of business school economics classes. It was great to be back in the classroom. Don’t get me wrong – I like my current job. But it was nice not to have to vote on anything.I opened my discussions with a pair of questions, asking students to put themselves in the place of a monetary policymaker choosing a target for the federal funds rate. First I gave them a set of hypothetical facts about the state of the economy – a slowdown in housing in the wake of multi-year housing boom; rising mortgage default rates; preliminary indicators of ...
Speech
Unlocking Our Potential
The economy looks quite strong at present. GDP growth is solid, unemployment is low, payroll employment is growing quickly and inflation is firming toward the Fed’s 2 percent target.Underlying this growth has been strong consumer and business confidence. At the same time, consumers and businesses are concerned about the future.Growth is critical to the future, as it creates more room for rates to rise, improves fiscal health and creates better lives for people in need. Our growth potential may be low due to slow population and productivity growth. That creates challenges for monetary ...
Speech
Inflation Then and Now
Labor market conditions remain solid, while inflation remains somewhat elevated. It makes sense to stay modestly restrictive until we are more confident inflation is returning to our 2 percent target.I recognize the fight against inflation has been long. But it is critical that we remain steadfast.It is tempting to focus on gaming out short-term factors, but it’s hard to make significant monetary policy changes amidst such uncertainty. So, I prefer to wait and see how this uncertainty plays out and how the economy responds.
Speech
The Regional Economic Outlook
It is a pleasure to be with you today to discuss the economic outlook for the region. I work, as Barbara’s kind introduction noted, at the Federal Reserve Bank of Richmond. The fact that our nation’s capital lies within the Richmond Federal Reserve District, rather than the other way around, is an odd byproduct of decisions made over 90 years ago. When establishing the Federal Reserve System as the nation’s central bank, Congress created a confederation of regional banks, rather than a single, centrally located bank. The founding organizers then made Richmond the headquarters for the ...
Speech
Economic Outlook, December 2010
It is a pleasure to be here again this year and to be able to see some long-time friends. Many of you regular attendees of this gathering are quite familiar with the background to our current macroeconomic situation. For the past two years, our discussions have been concerned with the financial crisis and its aftermath, and rightfully so, since the 18-month-long recession that ended mid-2009 was the most severe contraction in over 70 years. Since the end of the recession, real GDP has grown at an annual rate of 2.9 percent, which is barely above trend and quite modest when compared to other ...