The Economic Outlook, July 2010

It's a pleasure to discuss the economic outlook tonight. I think the most useful tack to take to get started is to survey the broader economic context, and then set our sights on some of the supporting details. For the last year or so, we have been recovering from a very severe recession, and despite the unique features of the contraction, this recovery resembles many that we've seen in the past; some sectors are expanding, while some sectors are still struggling. Signs of strength are evident in manufacturing, business equipment investment and consumer spending, while weakness persists in the labor market, construction, and state and local government spending. And as was the case in many past recoveries, this one is proceeding at an uneven pace; growth was quite strong in the fourth quarter, but more moderately paced over the last two quarters. Thankfully, inflation has remained low and fairly stable. The most likely scenario is for this pattern to continue – that is, for the recovery to continue at a pace that is generally moderate, but variable over time and across sectors. That's the broad aerial view, and now I'd like to come down to sea level to get a closer look at some of the particulars. I'll be speaking mainly about the national outlook, with occasional comments about the Hampton Roads region. Before I begin, I should mention that these are my own views and are not necessarily shared by my colleagues on the Federal Open Market Committee.