the bank of japan ’ s january report of recent economic and financial developments bank of japan, communication, 6 / 2 / 98. summary japan ’ s economic growth remains stagnant. sluggish domestic demand, especially household expenditures, has been exerting negative influence upon production, employment and income. corporate sentiment has also weakened. with respect to final demand, net exports have continued to increase, and business investment has been rising moderately, mainly in the manufacturing sector. meanwhile, private consumption has continued to stagnate, reflecting cautious household sentiment that has persisted even after the rebound of the front - loading expansion of spending prior to the consumption tax hike had subsided. housing investment has continued to be weak and public - sector investment has been decreasing. reflecting the weak final demand, inventory adjustment pressures have been spreading, and industrial production has been on a slightly declining trend. the pace of improvement in employment and income conditions has also been slowing. thus, the positive growth cycle of production, income, and expenditures has stalled. as regards the outlook of the economy, external demand is expected to continue upholding the economic growth, and the special tax - cut measures announced in december 1997 are expected to have positive effects on household spending. overall, however, the economy is likely to remain stagnant for a while, due to the intensifying pressures of inventory adjustment, the continued decline in public - sector investment, and the anticipated deceleration in business fixed investment. given the slowdown in the pace of growth, the economy is considered to be vulnerable to further negative impacts. in these circumstances, the possibility of the emergence of further downside risks should be carefully observed, such as prolonged and intensified adjustments in the asian economies, more restrictive lending stance of financial institutions impeding corporate finance, or further deterioration of confidence in the corporate and household sectors. with regard to prices, wholesale prices have declined reflecting a slack in the supply and demand conditions of goods. meanwhile, consumer prices have remained at a level slightly above that of the previous year when observed excluding the effects of institutional changes such as the rise in the consumption tax rate. thus, prices on the whole remained stable. prices are likely to be steady in the immediate future, since downward pressures on prices are not as significant as was the case in 1995, when the yen ’ s appreciation induced a penetration of imports, which then directly dampened prices of import - competing domestic final goods, arousing concerns for a deflationary spiral in the economy. however

families, but also for food banks — which, at the same time, are reporting fewer donations. the result of all of this is that food insecurity is becoming more widespread — and more difficult to resolve. the ripple effects expand across the economy, as food insecurity drives economic inequality, which in turn is a barrier to cultivating a healthy workforce. and a healthy workforce is what we need to keep our economy strong. at the new york fed — and across the federal reserve system — one of our key areas of focus is to better understand the economic drivers and social determinants of health. we have been hosting a series of events that bring together experts on economic inequality and the needs of low - and moderate - income communities in our district. today ’ s event on food insecurity is part of that larger effort. but we recognize it ’ s not enough to merely study the issue. the role of our community development team is to champion promising solutions by connecting people, programs, and proposals with funding. up to 40 percent of food produced in the united states goes to waste 1 / 2 bis central bankers'speeches each year, so there is a huge opportunity to distribute that unused food to those who need it. you ’ ll be hearing more about that later today. but first, we ’ ll start off with a presentation from professor tashara leak. she ’ ll frame the discussion by talking about how food insecurity affects the health of children — and how that, in turn, shapes their economic prospects as they grow older. then, we ’ ll convene a panel of business and government leaders, along with impact investors, who will spotlight some of the innovative work being done to make healthy and affordable food more accessible. thank you all for joining us. and with that, i ’ ll turn it over to professor leak. 2 / 2 bis central bankers'speeches