including steel and certain types of machinery. i would add, however, that, on balance, the plusses for energy consumers from the fall in oil prices almost surely outweigh the minuses. remember that we are still a net importer of oil. putting it all together, the economic projections of most members of the fomc call for growth in real gross domestic product of roughly 2 – 1 / 2 percent per year over the next couple of years, a little faster than the pace of the recovery thus far, with the unemployment rate continuing to move down to near 5 percent by the end of this year. and for inflation, as i noted earlier, my colleagues and i expect inflation to move up toward our objective of 2 percent as the economy strengthens further and as transitory influences wane. of course, the outlook for the economy, as always, is highly uncertain. i am describing the outlook that i see as most likely, but based on many years of making economic projections, i can assure you that any specific projection i write down will turn out to be wrong, perhaps markedly so. for many reasons, output and job growth over the next few years could prove to be stronger, and inflation higher, than i expect ; correspondingly, employment could grow more slowly, and inflation could remain undesirably low. bis central bankers ’ speeches implications for monetary policy given this economic outlook and the attendant uncertainty, how is monetary policy likely to evolve over the next few years? because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward - looking manner. delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy. for this reason, if the economy continues to improve as i expect, i think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. to support taking this step, however, i will need to see continued improvement in labor market conditions, and i will need to be reasonably confident that inflation will move back to 2 percent over the medium term. after we begin raising the federal funds rate, i anticipate that the pace of normalization is likely to be gradual. the various headwinds that are still restraining the economy, as i said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain. if

the fed ’ s accommodative monetary policies. and credit availability to both households and small businesses has improved. in recent months, as i noted earlier, there has been some softness in the economic data. recent indicators of both household spending and business investment have slowed, and industrial output has declined. the commerce department ’ s initial estimate was that real gross domestic product was nearly flat in the first quarter of 2015. if confirmed by further estimates, my guess is that this apparent slowdown was largely the result of a variety of transitory factors that occurred at the same time, including the unusually cold and snowy winter and the labor disputes at ports on the west coast, both of which likely disrupted some economic activity. and some of this apparent weakness may just be statistical noise. i therefore expect the economic data to strengthen. all of that said, the headwinds facing our economy have not fully abated, and, as such, i expect that continued growth in employment and output will be moderate over the remainder of the year and beyond. despite the recovery i noted in home prices and a greater number of home sales, residential construction activity remains quite low. i mentioned the ongoing issues with mortgage credit, but more generally, many years of a weak job market and slow wage gains seem to have induced many people to double - up on housing, and many young adults continue to live with their parents. population growth is creating a need for more housing, whether to rent or to own, and i do expect that continuing job and wage gains will encourage more people to form new households. nevertheless, activity in the housing sector is likely to improve only gradually. the pace of business investment has also been only modest during this recovery, and some of the reasons might persist a while longer. businesses seem not to have had sufficient confidence in the strength and durability of the recovery to undertake substantial capital expenditures. moreover, some analysts have suggested that uncertainty, not only about the strength of the recovery but also about economic policy, could be a significant factor. and the fact that many businesses seem to be holding large amounts of cash may suggest that risk aversion is playing a role. weak investment in the energy sector is also likely to persist. this represents the negative side to the fall in oil prices, one being felt by the oil - producing regions of the country. new domestic oil drilling has plunged over the past few months, and we have also seen a slowdown in activity in sectors that supply oil production companies,