william c dudley : address to the new college class of 2010 remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the new college of florida 44th annual commencement, sarasota, florida, 21 may 2010. * * * congratulations, graduates. and congratulations, even more so, parents and all of you who supported these graduates along the way! thank you to the graduates and members of the faculty and administration for selecting me as new college of florida ’ s 44th commencement speaker. i am very grateful for the opportunity to speak here today in such a beautiful setting. it ’ s nice to be back. earlier today, i had the pleasure of meeting a few of you – in a smaller setting – to hear about your plans for after graduation ; or should i say, tomorrow. i am very impressed with the high caliber of graduates in your class. i also had a tour of the campus today, which i must say has changed a lot in the past 30 years. one thing that hasn ’ t changed, however, is the palm court – or as you all so affectionately call it, the “ center of the universe. ” i have very fond memories of my time at new college, aside from those great palm court parties. i received a terrific education and made some life - long friends. i hope the same has been true about your new college experience. i am especially grateful for the support from the faculty over the years – both while i was a student and afterwards. there are two people i would particularly like to highlight : jan van der veen – jan was the professor who really got me started in economics. bob bennedetti – bob agreed to a contract in which i would get a semester of college credit mainly through working on the 1972 presidential campaign in the california primary election and in ohio for the general election. probably learned more from that experience than anything else i have ever done in higher education. i would encourage all of you – republicans, democrats and independents – to get involved in public service at some point in your careers. i have many memories of new college – some about people such as jan and bob, and others about events and experiences. for example, one of the most remarkable events i have ever witnessed occurred here one night in december 1972 – the first apollo spacecraft night launch. i remember staring out from the top of a dormitory roof not far from here across the horizon looking at the star specks – wondering, is that the

rocket? when it actually came up over the horizon it truly was amazing. i remember it as no bigger than a half - inch gap between your thumb and index finger at arm ’ s length. and as the liftoff proceeded and the vapor trail started to decline over the horizon following the curvature of the earth – i really could see clearly that the world was truly round. maybe that ’ s a good metaphor for my new college experience! my only truly unpleasant memory here was one literature course ( student taught, i might add ) in which i received an evaluation that essentially noted that i could not read, write or think. i like to think that was a bit harsh, but everyone is entitled to their own opinion! new college truly is a special place. i like to call it “ graduate school for undergraduates ” because it really is a place that encourages students to intellectually engage, learn, think and communicate. the unstructured format of evaluations and contracts rather than grades is not for everyone – some folks need more structure. but i see that you have made it through and i congratulate you for that – it is an important milestone in your life. today, i want to talk about two issues : the economy you face as you graduate, and some advice – call it “ lessons learned ” – that might have some value to you as you contemplate what you are going to do with the rest of your life. the economy you face as new graduates the u. s. economy is recovering and we are now seeing the first signs of significant employment growth. thus, this is a better year to graduate than last. however, finding a job will not be easy – the unemployment rate is much too high – nearly 10 percent. and the recovery seems likely to be more sluggish than we would like. the economy is suffering from the hangover of the real estate and consumption boom that ended a few years ago. that boom collapsed beginning in mid - 2007. the result was a very deep downturn from which we are now only emerging. although the federal reserve has been aggressive about easing monetary policy to support economic activity, the recovery is not likely to be as robust as we would like for several reasons. first, households are still in the process of deleveraging. the housing boom created paper wealth that households borrowed against. this pushed the consumption share of nominal gross domestic product to a record high of about 70 percent. when the boom turned into a bust, those paper gains