Thank you for the opportunity to take part in this important and influential conference.1 I would like to discuss my view of current economic conditions in the United States, provide an assessment of the sustainability of the current momentum in the economy, and then conclude with a look at some of the potential implications that would follow from a sustained upturn in economic growth. To preview my conclusions, I am fairly optimistic about the current state of the economy. Along many dimensions, it has been quite some time since the economic environment has looked as favorable as it does now. Real gross domestic product (GDP) growth through the final three quarters of 2017 averaged almost 3 percent, a considerable step-up over the 2 percent average annual pace recorded over the previous eight years. The sustainability of the recent upturn in growth will depend importantly on whether some of the factors that have been holding back growth for the past decade diminish, including weak investment and productivity. In some cases, I believe the data look encouraging--for example, the recent strength of investment--but in others, less so, particularly the continued softness of productivity growth. On balance, I am cautious, but I am also optimistic enough to believe that the factors that have been holding back growth need not be permanent and could turn, even fairly rapidly.
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