late, suggesting that the recovery may be finally establishing a somewhat firmer footing. real gdp expanded at a 3 percent annual rate in the fourth quarter of 2011, the fastest growth since the first half of bis central bankers ’ speeches 2010. the average monthly gain in nonfarm payroll employment moved up to 256, 000 in january and february from 164, 000 in the fourth quarter. sales of light - weight motor vehicles rose to a seasonally adjusted annual rate of 15. 1 million in february, the highest since early 2008. the ism nonmanufacturing index rose for the third consecutive month in february and now stands at its highest level in a year. even the housing starts data have firmed somewhat, although from quite depressed levels. while these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods. to begin with, the economic data looked brighter at this point in 2010 and again in 2011, only to fade as we got into the second and third quarters of those years. 1 moreover, the united states has experienced unusually mild weather over the past few months, with the number of heating degree days in january and february about 17 percent below the average of the preceding five years. while this reduces the amount that households and businesses must spend for heating, i suspect that it temporarily boosts economic activity overall. for example, the mild weather is certainly conducive to higher than normal levels of construction activity, and we did see a surge in hours worked in that sector over the past few months. more importantly, real economic activity has yet to be strong enough on a sustained basis to make a big dent in the overall amount of slack in the u. s. economy. while it is true that growth was stronger in the fourth quarter, most of that growth was due to inventory accumulation. growth of final sales was actually quite weak. historically, a quarter in which inventory investment makes a significant growth contribution is typically followed by a quarter in which that growth contribution is modest or even negative. that appears to be what is shaping up for the first quarter of this year. based on available data, current expectations are that real gdp will expand at around a 2 percent annual rate during the first quarter of 2012. despite the increase of light vehicle sales, overall consumer spending has been sluggish. while growth of retail sales in february was reasonably strong in nominal terms, it was considerably less impressive when the large increase of gasoline prices that occurred that month is taken into

sarah dahlgren : supervisory reform for global banks remarks by ms sarah dahlgren, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the center for transnational legal studies seminar on “ the impact of us regulatory reform on global banks ”, new york city, 12 february 2013. * * * thank you for the invitation to speak today. please note that the opinions i express today are my own and do not necessarily reflect those of the federal reserve bank of new york or the federal reserve system. although the topic of the seminar is “ regulatory reform ”, i will focus my comments on “ supervisory reform ”. regulation and supervision work together to ensure a strong global financial system. while rules and regulations set out the standards that must be met, supervision provides the necessary oversight and enforcement to ensure firms are following the rules. it ’ s a challenge to supervise a large internationally active firm. many businesses are truly global and often include complex booking models that may involve trades being originated in one domicile with various sub components being booked in one or more other jurisdictions. as governor tarullo noted in a recent speech, there are unique challenges in regulating and supervising the u. s. operations of a global institution. although we have full authority over the local operations, we see only a piece of your global operations and regular access to information can be limited. it ’ s one thing when we have a view into all of the operations and access to decision makers at the top of the house – both senior management and boards of directors – as is the case when we are the home country supervisor. it ’ s another thing when we see but one piece of the organization. i can ’ t help but think of the fable about the blind men and the elephant – each of whom feels a different part of the elephant and each thinks he is right about what the elephant really is. i could continue the analogy, but i think my point is clear – without the context of the global organization, we can ’ t be sure whether we are seeing the head or the tail of the elephant, or the organization. if done well, host country supervisors can be the eyes and ears for the home country supervisor. we have context for the activities of the banks doing business in our markets and can provide that to the home country supervisor. in addition, host county supervisors can be helpful in ferreting out where practices aren ’ t consistent across a firm ; identifying where certain practices ( like stress testing