crude oil has returned to levels that prevailed at the end of last year, and both households and businesses should welcome the lower energy bills. equity values, with additional support from generally favorable earnings reports, are up substantially. spreads have narrowed significantly, continuing the downward trend that began last fall. other positive signs include further reductions in mortgage interest rates and the rebound in consumer confidence. all told, these indicators point to a noticeable reduction in the economic tensions that built up earlier this year. though markets can respond instantly to positive news, business investment decisions adjust more slowly, and that distinction is evident in current production and employment data. businesses cut another 80, 000 jobs in april, the jobless rate moved up to 6 percent, and new claims for unemployment insurance in recent weeks remain at levels associated with little net change in jobs. ( in minnesota, the jobless rate moved up to 4. 4 percent in march, and about 28, 000 workers filed claims for unemployment compensation in april. ) industrial production fell 1 / 2 percent in both march and april, and capacity utilization is under 75 percent. retail sales have been, on balance, lackluster in recent months. turning briefly to inflation, last week's report on the consumer price index showed, as expected, that consumer energy prices had begun to retreat noticeably last month, reversing about one - third of the run - up over the first three months of the year. in april, prices of core goods and services - that is, consumer prices excluding food and energy - were unchanged for a second month. as a result, the core cpi was up just 1 - 1 / 2 percent from last april. on balance, these indicators suggest that the economy will probably remain soft in the near future and that inflation will remain low. nonetheless, i continue to believe that the pieces are in place for future robust growth. looking back over the past three years, i am struck by how much the u. s. economy has had to contend with. for much of the period since mid - 2001, large negative wealth effects from the falling stock market, the shakeout in the high - tech sector, and the slowdown in economic activity abroad have combined to restrain economic activity. outside shocks, such as september 11, corporate scandals, and the war with iraq, provided additional drag to renewed expansion. the economy, however, proved to be remarkably resilient. looking forward, one must ask, what will lead to economic growth? the best way to start

mark w olson : assessing prospects for economic growth in the united states speech by mr mark w olson, member of the board of governors of the us federal reserve system, before the chambers of commerce of bloomington, eden prairie and edina bloomington, minnesota, 22 may 2003. * * * thank you for the invitation to be with you today. i would like to focus my remarks largely on what i think will, over time, lead the u. s. economy back to a path of solid economic expansion. in particular, i want to explain to you why i believe that, although the economy still faces substantial risks and although the timing and the extent of a pickup in activity remain uncertain, the stage has been set for an improvement in the economic climate. to lay the groundwork for that discussion and to put the current situation into perspective, i will briefly step back and touch on some recent economic history. i should note that my comments today reflect my own opinions and not necessarily those of my colleagues on the board of governors of the federal reserve or the federal open market committee. as you know, the latter half of the 1990s was a time of remarkable economic performance. businesses added workers and expanded output at a rapid clip. the unemployment rate fell from over 7 - 1 / 2 percent in the middle of 1992 to just under 4 percent by the end of 2000. in minnesota, the unemployment rate fell from 5. 2 percent to 3. 4 percent over the same period. the stock market soared, and - remarkably enough - core inflation moderated. much of this performance was fueled by an investment boom that also contributed importantly to rapid growth in labor productivity. to be sure, some of the acceleration in productivity over that period was cyclical in nature ; but more critical for our longer - run economic performance is that at least a portion of the pickup now appears sustainable. by late 2000, the boom had come to an end. the stock market began to retreat in early 2000, and by the end of the year, analysts were revising down their expectations for future earnings. many businesses were cutting back sharply on capital investment - particularly in high - tech equipment - as demand and profits weakened and many companies, such as those in the telecommunications industry, found that they had overspent on equipment during the boom. the downturn in the economy, which began in 2000, had two distinct characteristics. first, and thankfully, it turned out to be one of the shallowest in our economic history. second, it was