Comments on the Economy and Monetary Policy

It’s a great pleasure as always to be with you folks. I don’t recall exactly when I was first invited to speak to the Association, but it may have been as long as 15 years ago. Imagine that — an economist invited back to speak to the same group 15 years in a row. I can think of two alternative explanations for this extraordinary occurrence. One is that you all have serious memory problems — both short-term memory and long-term memory — and you keep forgetting how bad my jokes are. Another is that, after hearing my first speech, you felt sorry for me and have invited me back every year since to demonstrate conclusively that financial market professionals can be compassionate, stereotypes to the contrary notwithstanding. Whatever the reason, it’s good to be back in Washington once again, although you still have to be a little careful here late at night. Not too long ago, somewhere in downtown Washington, a mugger in a ski mask confronted a well-dressed man and said, “Give me all your money!” The man responded, “You can’t do that. I’m a United States Congressman.” “In that case,” the mugger said, “give me all my money.” See what I mean about bad jokes?! Seriously, it’s great to be back with you once again. As always, I’m looking forward to — and hopefully am adequately prepared for — the question Bert Ely will ask when I finish. As usual I’ll begin with a recap of recent developments in the economy to put the outlook in perspective. Then I’ll comment on the outlook — as others see it and I see it — and finally I’ll conclude with a few remarks