. the federal reserve bank of chicago ’ s national financial conditions index provides a useful summary statistic. 3according to this measure, financial conditions tightened significantly from the middle of 2014 to early 2016. by comparison, financial conditions today remain near the accommodative end of the range since the financial crisis, even with the recent tightening in conditions. the most notable tailwind is the shift in america ’ s fiscal policy stance from restraint to substantial stimulus in an economy close to full employment. in the earlier period, the economy had just weathered a challenging adjustment to a sharp withdrawal of fiscal support. today, from a position near full employment, the economy is poised to absorb $ 1 - 1 / 2 trillion in personal and corporate tax cuts and a $ 300 billion increase in federal spending. estimates suggest december ’ s tax legislation could boost the growth rate of real gross domestic product ( gdp ) as much as 1 / 2 percentage point this year and next. 4 on top of that, the recently agreed - to budget 1 / 4 bis central bankers'speeches deal is likely to raise federal spending by around 0. 4 percent of gdp in each of the next two years. 5 achieving our inflation objective and sustaining full employment although the economy is currently around full employment and has been expanding at an abovetrend pace, inflation has remained subdued for quite some time. over the past year, overall pce ( personal consumption expenditures ) inflation was 1. 7 percent, and core pce inflation was 1. 5 percent — not very different from the average level of core inflation over the past five years. the persistence of subdued inflation, despite an unemployment rate that has moved below most estimates of its natural rate, suggests some risk that underlying inflation may have softened. while transitory factors no doubt played a role in last year ’ s step - down in core pce inflation, various empirical analyses conclude that persistent factors are at play in the stubbornly low level of core inflation. according to a variety of measures, underlying inflation — the slow - moving trend that exerts a pull on wage and price setting — may be running below levels that are consistent with the federal open market committee ’ s ( fomc ) 2 percent inflation objective. 6 for example, some survey measures of longer - run inflation expectations are currently lower than they were before the financial crisis, as are most estimates based on statistical filters. inflation compensation has moved up recently, but is still running somewhat below levels that prevailed before the crisis. thus

, and that should help support the recovery. in the meantime, we are using our tools to help build a bridge from the solid economic foundation on which we entered this crisis to a position of regained economic strength on the other side. i want to close by thanking the millions on the front lines : those working in health care, sanitation, transportation, grocery stores, warehouses, deliveries, security — including our own team at the federal reserve — and countless others. day after day, you have put yourselves in harm ’ s way for others : to care for us, to ensure we have access to the things we need, and to help us through this difficult time. 2 / 2 bis central bankers'speeches