projects seek to combine the benefits to users of the check with the processing efficiencies of electronic payment systems. one more set of very interesting experiments involves electronic bill presentment and bill payment. there are competing models of the way technology can be used to eliminate paper and save time in both the presentment and payment of consumer bills. leading models draw heavily on the ach as the electronic payment mechanism, creating a much more flexible interface for users with the ach than has existed in the past. as we look forward, the federal reserve recognizes that whatever innovations develop, the check will likely be with us for many years. americans still write about sixty eight billion checks a year, and the numbers are expected to grow. at the federal reserve, we continue to modernize our check - processing systems. we are testing new systems for truncating and electronically presenting checks, which include capturing and storing the image of checks and enabling institutions to make payment decisions in real time by accessing these images through the internet. at the same time, we are working to strengthen the payments system by enhancing the long - term efficiency of our check and automated clearinghouse services. the federal reserve also clearly recognizes the need to foster innovation in the private sector and to help remove barriers to the development and adoption of new payment services for electronic and traditional commerce. as i have often said, to continue to be effective, government ’ s regulatory role must increasingly be focused on assuring that adequate risk management systems are in place in the private sector. as financial systems have become more complex, detailed rules and standards have become both more burdensome and less effective. if we wish to foster financial innovation, we must first be careful not to impose rules that inhibit it, and we must be especially watchful that we not unduly impede our increasingly broad electronic payments system. thus, the private sector needs to play the pivotal role in determining what payment services consumers and businesses actually demand and in supplying those services. in a period of change and uncertainty there may be a temptation, and a desire by some market participants, to have the government step in and resolve the uncertainty, whether through standards, regulation, or other policies. in the case of electronic payment innovations, only consumers and merchants will ultimately determine what new products are successful in the marketplace. government action can retard progress, but almost certainly cannot ensure it. one important role government can play, however, is to help identify and, where appropriate, help remove barriers to innovation.

to another large gain in the first quarter. investment should continue to be spurred by several factors : the accelerator effects of sales growth, favorable cash flow and financial conditions, ongoing opportunities to upgrade capital stocks with new technologies, and for this year, partial expensing. meanwhile, the decline in the dollar over the past two years and faster growth among our trading partners suggest that less of the strengthening of our domestic demand will be met by higher imports than it would be otherwise, and that rising exports will help to stimulate production in the united states. indeed, the global nature of the pickup in economic activity encourages me to think that we are seeing a fundamental turnaround in confidence and spending propensities that is likely to be self - reinforcing. all told, the u. s. economy has apparently made the transition from weakness to solid growth. however, even if these positive signs are borne out, the path of economic expansion will undoubtedly be uneven, and significant risks remain. one downside risk lies in spending by the household sector. purchases of new houses and durable goods have boomed over the past several years, raising the stocks of those capital goods in the hands of households. in addition, the saving rate is very low by historical standards. i expect that the growth in household investment will taper off, but a more pronounced pullback in spending cannot be ruled out, especially once interest rates rise. some observers have expressed concern that weakness in hiring, should it persist, would hold down the growth of labor income and weigh on consumer confidence, and thus could depress spending at some point. in recent quarters, however, slow hiring has been accompanied by strong productivity growth. over time, higher productivity will show up in higher wages. but even in the short - run, these new efficiencies have boosted capital income, and the resulting increases in dividend income and stock prices have, in the aggregate, provided at least a partial offset to restrained growth of wages and salaries. on the upside, business spending could turn out to be even more robust than i expect. businesses ’ caution about making commitments to meet future demand appears still to be eroding only slowly. should confidence return more quickly, we could see a more marked strengthening in capital spending, inventory accumulation, and hiring. the transition from extraordinary to merely rapid growth of potential aggregate supply the transition to more - rapid and self - sustaining increases in aggregate demand is critical to the outlook, but it is only part of the story. the full