mean that we are likely to see, nor should we seek to see, a return to the unsustainable levels of residential real estate activity that preceded the financial crisis. that did not end well. instead, the perspective i will offer today is one of sustainable improvement in housing in the context of a broader economic recovery. then, i will close with some thoughts on monetary policy. before i continue, though, i will note that my views are my own and not necessarily those of the federal reserve board or my colleagues on the federal open market committee ( fomc ). bis central bankers ’ speeches economic conditions so, let me begin with an overview of the u. s. economy. we are almost five years into a recovery that began in june 2009. growth accelerated in the second half of 2013 but faced some stiff winter headwinds in the first quarter of this year. yet, i think most of us now view this as a temporary weather - related slowdown and not a risk to the underlying recovery. snowstorms and frigid temperatures affected every aspect of the economy, from sales and hours worked to logistics and supply chains during the first quarter of the year. you can ’ t sell a house if buyers can ’ t get in the front door. you can ’ t sell a car if it is buried in snow. and even if your factory is producing goods, you can ’ t deliver them to your customers as scheduled if trucks can ’ t navigate the highways or if trains have to slow down to half their normal speed. my own view is that it will take another month or two before we can hope to see a somewhat clearer picture of the economy. the first estimate of gdp growth for the first quarter of 2014 showed that the overall economy was essentially flat, expanding at an annualized rate of just 0. 1 percent. the underlying details are more encouraging. consumer spending increased 3 percent, marking the 19th consecutive quarter of growth. this growth is supported by the fact that households have reduced their debt and strengthened their balance sheets over the past few years. and as the values of equities and real estate have risen, consumer savings rates have fallen and consumption spending has increased. the weakness in the overall gdp figure comes predominately from lackluster investment, both by businesses and homebuilders, as well as some pullback in exports and imports. our business contacts as well as our surveys confirm that economic activity was greatly hampered by the winter weather in the northeast

delisle worrell : the strength of barbadian institutions and the resolve of barbadians will see us through the crisis op - ed article by dr delisle worrell, governor of the central bank of barbados, 15 august 2013. * * * barbadians have every reason to be confident that we can cure the foreign exchange imbalance which has emerged in the last three months, and revive the growth of our economy. first, we have the highest standard of living in the caribbean, and we have earned it by transforming the economy and investing in infrastructure and human resources, over many decades. figure 1 compares the human development index ( hdi ) for barbados with the rest of the caribbean. the hdi is the best indicator of the quality of life available for countries worldwide. second, barbados has strong institutions for decision making : our social partnership is the envy of countries worldwide ; our economic information systems are the equal of many industrial countries ; our media are knowledgeable ; and we have a strong mechanism for putting policy into effect. thirdly, we have preserved the value of our dollar, protecting the value of people ’ s savings, and providing more predictable returns for investors. fourthly, we have reserves which are more than sufficient to ride out the storm, as may be seen in figure 2. with these resources we may confidently address the challenges, which are twofold. the first is to balance foreign exchange inflows and outflows. following the june 27th economic consultation, government is in discussion with the social partners on measures that will be introduced to reduce the fiscal deficit. the required adjustment is considerable, about 4. 5 % of gdp, but not sufficient to cause major social disruption, as may be seen in figure 3. the adjustment will protect the value of our currency, which is vital to barbados ’ economic prosperity. figure 4 shows how the caribbean countries which have devalued have fared, compared with those that have maintained an unchanged value of their currency in terms of the us dollar. economic growth is the second challenge. the social partners continue to pursue actions to revive the economy. investment amounting to $ 2. 3 billion is in prospect for the foreign exchange sectors, and government contemplates $ 1 billion of infrastructure and other projects. initiatives are underway to improve access to finance by small and medium enterprises. labour is charged with an urgent need to improve productivity and quality of service in every area of activity, so that barbados becomes a byword for