been a continuing favorable outlook founded on strength in the household sector, with a few yellow flags including muted inflation and weakness in manufacturing. in addition, global growth and trade have presented ongoing risks and uncertainties. we also faced some less prominent factors that always confront policymakers. specifically, we never have a crystal clear real - time picture of how the economy is performing. in addition, the precise timing and size of the effects of our policy decisions cannot be known in real time. in august, the bureau of labor statistics previewed a likely revision to its count of payroll job creation for the 12 months ended march 2019. the preview indicated that job gains over that period were about half a million lower than previously reported. on a monthly basis, job gains were likely about 170, 000 per month, rather than 210, 000. while this news did not dramatically alter our outlook, it pointed to an economy with somewhat less momentum than we had thought. 3 the fed ’ s real - time assessment of job growth this year is discussed in jerome h. powell ( 2019 ), “ datadependent monetary policy in an evolving economy, ” speech delivered at “ trucks and terabytes : integrating the ‘ old ’ and ‘ new ’ economies, ” the 61st annual meeting of the national association for business economics, denver, colorado, october 8, https : / / www. federalreserve. gov / newsevents / speech / powell20191008a. htm. - 4uncertainty about how our policies are affecting the economy also entered our discussions. as you know, we set our policy interest rate to achieve our goals of maximum employment and stable prices. in doing so, we often refer to certain benchmarks. one of these is the interest rate that would be neutral — neither restraining the economy nor pushing it upward. we call that rate “ r * ” ( pronounced “ r star ” ). a policy rate above r * would tend to restrain economic activity, while a setting below r * would tend to speed up the economy. a second benchmark is the natural rate of unemployment, which is the lowest rate of unemployment that would not create upward pressure on inflation. we call that rate “ u * ” ( pronounced “ u star ” ). you can think of r * and u * as two of the main stars by which we navigate. in an ideal world, policymakers could rely on these stars like mariners before the advent of gps. but, unlike celestial

current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market, and inflation near our symmetric 2 percent objective. looking ahead, we will be monitoring the effects of our policy actions, along with other information bearing on the outlook, as we assess the appropriate path of the target range for the federal funds rate. of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly. policy is not on a preset course. i will wrap up with two areas where we have an opportunity to build on our gains. - 6a sustained return of inflation to 2 percent for many years as the economy recovered from the great recession, inflation averaged around 1. 5 percent — below our 2 percent objective ( figure 3 ). we had long expected that inflation would gradually rise as the expansion continued, and, as i noted, both overall and core inflation ran at rates consistent with our goal for much of 2018. but this year, inflation is again running below 2 percent. it is reasonable to ask why inflation running somewhat below 2 percent is a big deal. we have heard a lot about inflation at our fed listens events. people are concerned about the rising cost of medical care, of housing, and of college, but nobody seems to be complaining about overall inflation running below 2 percent. even central bankers are not concerned about any particular minor fluctuation in inflation. around the world, however, we have seen that inflation running persistently below target can lead to an unhealthy dynamic in which inflation expectations drift down, pulling actual inflation further down. lower inflation can, in turn, pull interest rates to ever - lower levels. the experience of japan, and now the euro area, suggests that this dynamic is very difficult to reverse, and once under way, it can make it harder for a central bank to support its economy by further lowering interest rates. that is why it is essential that we at the fed use our tools to make sure that we do not permit an unhealthy downward drift in inflation expectations and inflation. we are strongly committed to symmetrically and sustainably achieving our 2 percent inflation objective so that in making long - term plans, households and businesses can reasonably expect 2 percent inflation over time. - 7spreading the benefits of employment many people at our fed listens events have told us that this long expansion is now benefiting low