policy rate to respond to adverse developments, recognizing that we could also use forward guidance and balance sheet policies to provide additional accommodation if that proved warranted. of course, the trajectory of short - term interest rates and the timing of future monetary policy adjustments will continue to be informed by the incoming data – both economic and financial – and how that data influences the outlook. the problem of long - term unemployment before turning to the outlook for the local economy, i would like to spend a few minutes talking about the problem of long - term unemployment. the great recession was very severe, resulting in a large decline in output and damage to the labor market. from peak to trough, non - farm payroll employment declined by 8. 7 million. the unemployment rate peaked at 10 percent. at the same time, the average duration of unemployment increased significantly. the number of individuals classified as long - term unemployed – that is, those who were unemployed for at least 27 weeks – peaked in december 2010 at 6. 4 million, an increase of 5. 3 million from the cyclical low in may 2007. long - term unemployment as a fraction of total unemployment increased from 16. 7 percent to 44. 8 percent. the hardships of prolonged unemployment touched many families around the country and this is tragic. the very accommodative monetary policy that we implemented in response was aimed at helping to heal the labor market and promote price stability. slowly, the economy began to respond and to recover. in october 2014, the fomc announced the end of its latest asset purchase program citing that “ there has been substantial improvement in the outlook for the labor market since the inception of its current asset purchase program. ” in march 2015, the bis central bankers ’ speeches fomc set out conditions for the decision to begin to normalize monetary policy, stating “ the committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. ” the fomc judged at its december 2015 meeting that those conditions had been met. the improvement that we have seen in the labor market is very welcome. it took until may 2014 for the labor market to recover the jobs lost in the recession, but now there are 5. 3 million jobs beyond the prior cyclical peak. the unemployment rate has declined to 5. 0 percent. with this improvement, the number of

a team that is raising awareness of the challenges that make it so difficult to " notice, " innovating on how we approach analysis and decision - making, and making these approaches an essential part of what it means to work at the bank. this is much in the spirit of what iarpa sought to do by sponsoring their tournament. to compete in the iarpa tournament, tetlock recruited participants online from outside the intelligence community. a small number of these participants quickly separated themselves from the pack and consistently maintained their exceptional performance. tetlock dubbed these individuals " superforecasters " and subsequently focused his team on aggregating the forecasts of these standout performers — a strategy that draws from the " wisdom of the crowd. " as you well know, this strategy relies on some degree of independence in the information, approaches, and insights producing the forecasts. we often think of independence in a very statistical sense, but superforecasting conveys a useful framing of independence as how one assembles diverse teams and how team dynamics can be established to maintain this diversity. 4 this approach won the iarpa tournament by a substantial margin with the use of one subtle but important tweak. tetlock extremized the aggregated prediction probabilities — so, for example, a probability of 70 percent became 85 percent. 1 / 6 bis central bankers'speeches so what can we learn from these non - technical superforecasters who outperformed the intelligence community? tetlock lists a number of characteristics that generate individual diversity and maintain that diversity in a team dynamic. my quick summary of these lessons is to be humble, always question, listen to alternative views, and — very comfortingly for bayesians like me — always express your forecast as a distribution rather than a point forecast, and crucially update that forecast when new information arrives. further, constantly assess why forecasts worked and didn't work. in contrast, the book is full of examples of forecasters and pundits whom philip tetlock refers to as hedgehogs ; knowing one central truth, they take data as either affirming their views or, if not, discarding the data as unreliable, irrelevant, or uninteresting. the impact of the great recession has been helpful in removing some of this type of hubris, but memories are short, and tetlock's work shows that making lasting improvements in processes that produce good judgment and