as well as by a negative contribution from inventory investment. although private domestic final demand appears to have slowed somewhat in the fourth quarter, it has continued to advance. household spending has been supported by steady job gains and solid growth in real disposable income – aided in part by the declines in oil prices. one area of particular strength has been purchases of cars and light trucks ; sales of these vehicles in 2015, reached their highest level ever. in the drilling and mining sector, lower oil prices have caused companies to slash jobs and sharply cut capital outlays, but in most other sectors, business investment rose over the second half of last year. and homebuilding activity has continued to move up, on balance, although the level of new construction remains well below the longer - run levels implied by demographic trends. financial conditions in the united states have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar. these developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market, although declines in longerterm interest rates and oil prices provide some offset. still, ongoing employment gains and faster wage growth should support the growth of real incomes and therefore consumer bis central bankers ’ speeches spending, and global economic growth should pick up over time, supported by highly accommodative monetary policies abroad. against this backdrop, the committee expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen. as is always the case, the economic outlook is uncertain. foreign economic developments, in particular, pose risks to u. s. economic growth. most notably, although recent economic indicators do not suggest a sharp slowdown in chinese growth, declines in the foreign exchange value of the renminbi have intensified uncertainty about china ’ s exchange rate policy and the prospects for its economy. this uncertainty led to increased volatility in global financial markets and, against the background of persistent weakness abroad, exacerbated concerns about the outlook for global growth. these growth concerns, along with strong supply conditions and high inventories, contributed to the recent fall in the prices of oil and other commodities. in turn, low commodity prices could trigger financial stresses in commodity - exporting economies, particularly in vulnerable emerging market economies, and for commodity - producing firms in many countries. should any of these

, time is needed to assess their effects. another matter to consider is the recent months ’ developments in financial markets. they, too, call for a cautious line in monetary policy. i note that the swedish economy seems to have made good progress in adjusting to a low inflation regime, with stable, sustained growth. what gives cause for concern, however, is that the recovery of employment appears to be much more sluggish and that unemployment is persistently high. high cost of unemployment as shown in diagram 1, registered unemployment in sweden rose sharply in the early 1990s ; from a level between 2 and 3 per cent, it shot up to around 8 per cent. this was accompanied by increased participation in labour market programmes. total unemployment accordingly reached around 13 per cent, an increase of almost 10 percentage points or up to half a million people. this is the highest level since the 1930s. it is primarily among youth that unemployment is high, as shown in diagram 2. sweden seems to have landed in much the same situation as many other countries in europe. high unemployment is associated with grave social problems and large economic costs. unemployment ’ s long - run economic costs in terms of gdp can be said to be of d iagra m 1 u n em p lo ym en t 1 9 6 5 - 9 6 p er cen t t ota l r e g is te re d s o u rce s : s ta tis tics s w e d e n a n d n a tio n a l l a b o u r m a rke t b o a rd d ia g ra m 2 a g e - re la te d u n e m p lo y m e n t ra te s p er cen t 1 6 - 2 4 y rs. 2 5 - 3 4 y rs. 1 6 - 6 4 y rs. s o u rce : s ta tis tics s w e d e n approximately the same magnitude as the unemployment rate. 1 sweden ’ s increase in unemployment can in this way be estimated to cost around 10 per cent of gdp a year, which is equivalent to skr 150 billion. considering the sensitivity of general government finance to variations in unemployment and production, the cost to the public sector, in the form of lower assuming that changes in the capital stock roughly parallel employment and that average productivity is constant. tax revenue and increased expenditure on unemployment support, for example, may actually be as high as 9 per cent