and predictable, and there is no surprise in the fact that slower population growth and the retirement of the baby boomers are now contributing to slower growth in the total amount of work performed in the economy. there is another factor contributing to the slower growth in hours, however, and this factor is more surprising and more troubling. to be counted as “ in the labor force, ” a these estimates are based on the congressional budget office ’ s ( 2019 ) estimates for potential gdp for the budget and economic outlook : 2019 to 2029 ( washington : cbo, january ), https : / / www. cbo. gov / publication / 54918. economy - wide productivity includes the nonbusiness sector. john g. fernald, robert e. hall, james h. stock, and mark w. watson ( 2017 ), “ the disappointing recovery of output after 2009, ” nber working paper no. 23543 ( washington : national bureau of economic research, june ), https : / / www. nber. org / papers / w23543. - 5person must either be employed or have looked for work within the past four weeks. the share of people of working age who are actually in the labor force has fallen significantly since the late 1990s. this decline raises the important question of why have people of working age increasingly chosen not to work. the data suggest that there are both positive and more problematic forces at work. for example, among those aged 16 to 24, participation in the labor market has fallen from about 65 percent in the 1990s to 55 percent now ( figure 6 ). but this drop in participation appears to reflect young people getting more education. the fraction of this age group who are neither in school nor in the labor force has held fairly constant at around 11 percent, and measures of school enrollment are up. 5 higher educational attainment is much more important in today ’ s job market than in the past, and investing in education today has long - term benefits for both the student and for society. 6 statistics confirm that higher educational attainment is associated with higher labor force participation, lower unemployment, and higher wages. turning to those aged 25 to 54, the participation picture is more troubling. among prime - age men, participation has been falling for more than 60 years, with the decline averaging about 1. 5 percentage points per decade ( figure 7 ). for women, participation rose over the second half of the 20th century until peaking in the late

the federal reserve must take an active interest in all the factors that affect economic performance, including business and consumer confidence, economic growth abroad, the foreign exchange value of the dollar, fiscal policy, and, of course, asset prices. we take the level of the stock market into account when we consider the economic outlook and monetary policy. but let me be clear : we do not target a particular level of equity prices. we attempt simply to judge the likely influence of the stock market as well as other important factors on the level of aggregate demand and aggregate supply and, hence, on the economy ’ s ability to achieve price stability and maximum sustainable employment. in this respect, the stock market plays the same role in our analysis as does any other influence on our outlook. while our goal of price stability can foster a favorable environment for business investment, we make no these calculations include both equities held directly and equities owned indirectly through mutual funds, defined contribution pension plans, defined benefit pension plans, life insurance companies, and personal trusts. figures from the 2001 survey of consumer finances are not yet available. pretense to being able to control how that plays out in the stock market. we cannot avoid gauging the effect of the stock market on economic performance, but we do not target stock prices. the dramatic movements in asset prices over the past several years have affected aggregate demand and, to some extent, aggregate supply in the united states. in the late 1990s, the growth rate of u. s. labor productivity increased beyond the expectations of most observers. an important source of the faster pace of productivity was a surge in capital spending fostered by the development of new technology. faster productivity growth was among the factors that boosted equity valuations ; in turn, larger expected productivity advances and a lower cost of equity capital provided a further stimulus to investment. the pickup in investment combined with the wealth effect on consumption to boost aggregate demand. the rapid pace of investment also helped to hold down inflationary pressures by increasing the growth of productive capacity. however, by the summer of 1999, the persistent strength of domestic demand and tightening resource utilization in the united states, especially for labor, heightened concern among policymakers that inflationary pressures could undermine the impressive performance of the economy. accordingly, the federal reserve raised short - term interest rates. the objective was not to bring down the stock market but rather to bring the growth of aggregate demand and aggregate supply into better alignment. of course, the u. s. economy has