william c dudley : economic overview – queens and the region remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, to the queens chamber of commerce and queens economic development corporation, flushing, new york city, 11 march 2011. * * * good morning. i am pleased to come to flushing ’ s main street to speak to the leaders of your vibrant business community. i thank the queens chamber of commerce and the queens economic development corporation for their help in organizing today ’ s breakfast and for reaching out to the people in this room and those we will meet later today – the business, community and academic leadership of queens. you may have noticed videos playing as you walked into the room. these videos are the winners of a federal reserve bank of new york contest to promote financial literacy among young adults. this year, students from laguardia community college took both first and second - place in the competition. the top winning video ran as a public service announcement at several movie theaters in new york city. all three videos are available on the new york fed ’ s website and on youtube. 1 this is an impressive achievement and i applaud the students and laguardia community college. although some people may refer to queens as an “ outer borough, ” i am quite aware that the center of population of new york city is in maspeth, queens. of course, queens is special not just for its central location, but also for its extraordinary diversity. queens continues to serve as a land of opportunity for immigrants from all over the world. roughly 46 percent of queens ’ population is foreign born – more than four times the national average and higher than any other county in the country with the exception of miami - dade. sizable communities of immigrants from countries ranging from columbia to korea, ecuador to egypt, greece to guyana, and italy to india have made queens their home. this morning i will talk to you about national and regional economic conditions. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. introduction to the new york fed by way of introduction, let me start with a synopsis of what the new york fed is, what we do and what makes my job so interesting. the new york fed is part of the federal reserve system, america ’ s central bank, and was created by congress in 1913. with this act, congress delegated to the

will need to see sustained strong employment growth in order to be certain that this virtuous circle has become firmly established. with respect to the labor market, last friday ’ s report helps resolve some conflicting signals. on one hand, the unemployment rate has fallen sharply over the past three months, dropping to 8. 9 percent from 9. 8 percent two months earlier. on the other hand, payroll employment gains had been very modest and were not consistent with a sustained drop in the unemployment rate. last friday we learned that the economy added 192, 000 jobs in february, and estimates of previous job growth were adjusted upward modestly. particularly encouraging is the growth of manufacturing jobs. over the past year we have added factory jobs at the fastest pace since the 1990s. this makes me more confident that job growth in january was temporarily depressed by unusually bad winter weather. other labor market indicators, such as initial claims for unemployment insurance benefits and the employment components of both manufacturing and nonmanufacturing business surveys have also shown improvement recently. although there is still uncertainty over the timing and speed of the labor market recovery, i do expect that job growth will increase considerably more rapidly in the coming months. we should welcome this. a substantial pickup is sorely needed. even if we were to generate growth of 300, 000 jobs per month, we would still likely have considerable slack in the labor market at the end of 2012. so, why is the economy finally showing more signs of life? in my view, the improvement reflects three developments. first, household and financial institution balance sheets continue to improve. on the household side, the 2008 – 09 rise in the saving rate appears to have stabilized in the 5 percent to 6 percent range. meanwhile, the amount of money they need to service their debt ( for mortgages, cars, credit cards, etc. ) has fallen sharply to levels that prevailed during the mid - 1990s. debt service has been pushed lower by a combination of debt repayment, refinancing at lower interest rates and debt write - offs. financial institutions have strengthened their balance sheets by retaining earnings and by issuing equity. as a result, some measures of bank credit are beginning to expand again. second, monetary policy and fiscal policy have provided support to the recovery. on the monetary policy side, we at the fed have maintained unusually low levels of short - term interest rates and engaged in large - scale asset purchases. these measures have fostered a sharp improvement in financial market conditions. on the fiscal side