Economic Outlook, April 2011

It's a pleasure to speak on the economy today. Like many of you, I almost dread picking up a newspaper in the morning and seeing headlines about natural disasters and new outbreaks of fighting around the world. And even when the subject is the economy, the news is full of risks, surging oil prices and a broken Federal budget. I don't want to minimize these risks, which are real. But I also don't want to lose sight of an economy that is firmly in recovery mode, and the fundamentals for future growth are strong. Before we look at the economic outlook in more detail, I would like to emphasize that these remarks are my own and the views expressed are not necessarily shared by my colleagues in the Federal Reserve System. 1 Let me begin by setting the stage. In 2008 and through the first half of 2009, we experienced the worst recession since the Great Depression. We saw growth turn positive again in July 2009. Our best measure of overall economic activity, gross domestic product or GDP, increased at a modest 2.9 percent annual rate over the next six quarters. Many observers were disappointed with that modest growth, which was barely above the long-run trend rate that results from population growth and productivity growth. But at least real GDP has improved, since its level is now above its previous peak in the fourth quarter of 2007. Other important indicators of growth have not recovered. The number of employees on nonfarm payrolls has risen by 1.4 million persons in the last 15 months, but that increase is dwarfed by the 8.7 million jobs that were lost in the previous two years. It's fair to say that we have a ways to go before we will fully recover from what many are calling the Great Recession.