high by historical standards, overall vulnerabilities in the financial sector appear moderate, as the banking system is well capitalized and broad measures of leverage and credit growth remain contained. even with a step - up in growth of economic activity and a stronger labor market, inflation has continued to run below the 2 percent rate that the federal open market committee ( fomc ) judges most consistent with our congressional mandate to foster both maximum employment and price stability. increases in gasoline prices in the aftermath of the hurricanes temporarily pushed up measures of overall consumer price inflation, but inflation for items other than food and energy has remained surprisingly subdued. the total price index for personal consumption expenditures increased 1. 6 percent over the 12 months ending in september, while the core price index, which excludes energy and food prices, rose just 1. 3 percent over the same period, about 1 / 2 percentage point slower than a year earlier. in my view, the recent lower readings on inflation likely reflect transitory factors. as these transitory factors fade, i anticipate that inflation will stabilize around 2 percent over the medium term. however, it is also possible that this year ’ s low inflation could reflect something more persistent. indeed, inflation has been below the committee ’ s 2 percent objective for most of the past five years. against this backdrop, the 1 / 2 bis central bankers'speeches fomc has indicated that it intends to carefully monitor actual and expected progress toward our inflation goal. although the economy and the jobs market are generally quite strong, real gdp growth has been disappointingly slow during this expansion relative to earlier decades. one key reason for this slowdown has been the retirement of the older members of the baby - boom generation and hence the slower growth of the labor force. another key reason has been the unusually sluggish pace of productivity growth in recent years. to generate a sustained boost in economic growth without causing inflation that is too high, we will need to address these underlying causes. in this regard, the congress might consider policies that encourage business investment and capital formation, improve the nation ’ s infrastructure, raise the quality of our educational system, and support innovation and the adoption of new technologies. monetary policy i will turn now to the implications of recent economic developments and the outlook for monetary policy. with ongoing strengthening in labor market conditions and an outlook for inflation to return to 2 percent over the next couple of years, the fomc has continued to gradually reduce policy accommodation. the committee raised the target range

credit : how borrowers perceive their education debt results of the 2002 national student loan survey, february 2003. draut, tamara and silva, javier, “ generation broke : the growth of debt among young americans, ” demos : a network for ideas and action, october 2004. aizcorbe, ana ; kennickell, arthur, and moore, kevin, “ recent changes in u. s. family finances : evidence from the 1998 and 2001 survey of consumer finances, ” january 2003. employee benefit research institute, “ will americans ever become savers? the 14th retirement confidence survey, 2004, ” april 2004. indeed, lawmakers, regulators, and employers look to consumer savvy to promote efficiency in the consumer financial services industry. in recent years, surveys and other studies that evaluate the understanding of financial concepts have demonstrated the need for improved financial education, especially among younger consumers. one nonprofit organization dedicated to increasing financial education for youth, the jump $ tart coalition, has conducted a survey of financial literacy of high school seniors every two years since 1997. overall, the results have been disappointing : results from the 2004 survey showed more than 65 percent of students failed the survey ’ s questionnaire, with only 6 percent scoring a “ c ” or better. in terms of credit card usage by college students, a government accountability office ( gao ) study found that students were more likely than other borrowers to run up debts they could not pay because of financial inexperience. in recognition of this behavior, many credit card issuers provided access to financial education materials, and debt counseling services for students who faced repayment difficulties, but the gao did not try to determine the effectiveness of these education efforts. 6 some preliminary research by others suggests some possible benefits from online credit education tutorials to college student cardholders, but it is possible that more responsible usage only reflects the type of student who would participate in the tutorial. 7 clearly, more research is needed to assess the efficacy of consumer education, and the federal reserve system has been an active promoter. in fact, the system hosted a conference in early april on consumer financial awareness, including a session on the efficiency of delivering financial education to consumers. so what resources are available to consumers to help them become sufficiently familiar with financial concepts to make sound financial decisions? many public, private, and nonprofit organizations have developed a variety of financial education programs, and many are available on the internet. these educational materials address the full range of personal financial management