Economic Outlook

It's a pleasure to be here in Charlotte again this year for the Annual Economic Conference. I am honored to be invited back for a third appearance, particularly after my forecasting performance last year. Before I begin, I owe you the usual disclaimer that these views are my own and are not necessarily shared by my colleagues around the Federal Reserve System. For those of you who have followed my voting record, however, this should come as no surprise. In considering the economic outlook, it's important to bear in mind the broader transition that is taking place. In the three-year period leading up to the middle of this year, we've seen above average growth. Real gross domestic product — our best measure of total production in the economy — grew at a 3 ¾ percent annual rate. To appreciate the strength of that performance, note that the trend rate of GDP growth — by which I mean the rate consistent with trend growth in productivity and the labor force — is more like 3 percent. Labor market conditions improved significantly over that period, with 5.4 million new jobs created and the unemployment rate falling by a full 1 ½ percentage points. With jobs increasingly plentiful, household spending surged — real per capita consumption rose at a robust 2.6 percent annual rate. And even as their spending increased, consumers continued to build wealth; household net worth increased by 31 percent to reach a level equal to 5 years of personal income.