john c williams : restoring balance remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at new jersey city university, 18 february 2022. * * * as prepared for delivery good morning, everyone. i want to thank sue henderson for that kind introduction, and new jersey city university for hosting today ’ s discussion. i always enjoy speaking with students, and i look forward to the time — hopefully soon — when we can have these types of events in person. today, our virtual setting is jersey city, one of the most diverse cities in the world — and one known for terrific pizza. now, it ’ s not my place to get into the debate over who has the best pizza, and i know that people have strong views on that subject. as president of the new york fed, i proudly represent both sides of the hudson river, and my job is to make the economy stronger and the financial system more stable for all. before i move on from the topic of pizza to economics, i should give the standard fed disclaimer that the views i express today are mine alone. they do not necessarily reflect those of the federal open market committee — what we call the “ fomc " — or others in the federal reserve system. as you well know, the economy — like many facets of our lives — continues to be shaped by the unpredictable nature of the coronavirus. as i ’ ve said before, the pandemic is first and foremost a health crisis. while omicron was milder for many — and thankfully the wave subsided relatively quickly — it still caused terrible hardship for countless families. you can see the economic effects of the pandemic right here in new jersey. what struck me this week as i met with new jersey business, community, and political leaders was the different ways that covid - 19 affects local economies. just a few miles from jersey city, port newark and port elizabeth are humming with activity. but across the turnpike, newark liberty international airport has seen a big reduction in the number of flights and passengers relative to pre - pandemic trends. likewise, the pandemic has led to empty office buildings and fewer travelers in new york city, which affects businesses here in new jersey as well. today i ’ m going to talk about how the economy has continued to recover despite the many disruptions and imbalances that covid - 19 has caused. i ’ ll

fallen from the pandemic peak of 14. 7 percent to just 4 percent today. in fact, there are many more job openings now than there are people looking for work. another clear sign of the hot labor market is that wages rose sharply last year, especially for lower - paid jobs. inflation i mentioned earlier that the federal reserve has two goals : maximum employment and price stability. the very strong labor market is great news in terms of achieving maximum employment. however, we have seen inflation rise to a level that ’ s far too high. ten years ago, the fomc set a longer - run goal of 2 percent inflation — that is, prices rising 2 percent per year on average. 1 from 2012 through 2020, inflation averaged below this 2 percent goal. but the inflation rate started rising sharply in 2021. the fed ’ s preferred price measure, the personal consumption expenditures ( pce ) price index, rose 5 - 3 / 4 percent last year, its highest reading since the early 1980s. this sudden, sharp rise in prices reflects a unique set of circumstances that has driven supply and demand out of balance. for those of you who have studied economics, you will not be surprised that i ascribe this rise in inflation to demand outpacing supply. but, the rapidly changing situation of the past two years has been extraordinary, and it is worth discussing in some detail. after the onset of the pandemic, americans shifted their spending from services to goods, spending less on restaurants, vacations, and entertainment, and more on things like cars, appliances, and furniture. as businesses tried to meet the surge in demand for goods, distribution channels backed up. supply - chain bottlenecks and shortages emerged, both here and abroad. too many ships arrived at the ports — particularly those in california. when the ships were finally able to dock, there weren ’ t enough workers and drivers to unload and transport goods to stores — or to people ’ s homes. in addition, we have seen a large pullback in the number of people willing and able to work, in part reflecting the challenges and risks of working during the pandemic. some businesses can ’ t hire people fast enough to help meet the strong demand. this has contributed to an acceleration in wages and higher prices for a variety of goods and services, including food and housing. high inflation is hardest on those already struggling to make ends meet. the fed ’ s response this brings me to the outlook for the economy