contrast, employment in the manufacturing sector and the federal government declined a combined 20, 000 per month. and the resulting uncertainty is, i believe, an important contributing factor behind the relatively sluggish pace of business investment spending. my best guess is that growth for all of 2013, measured on a q4 / q4 basis, will be about what it has been since the end of the recession. but i believe a strong case can be made that the pace of growth will pick up notably in 2014. the private sector of the economy should continue to heal, while the amount of fiscal drag will begin to subside. i also see some indications that growth prospects among our major trading partners have begun to improve ; for example, the rise in the june euro area composite purchasing managers ’ index. and this combination of events is likely to create an environment in which business investment spending will gather strength. finally, i believe this tug - of - war analogy is useful in explaining the recent inflation dynamics. as is well known, total inflation, as measured by the personal consumption expenditures ( pce ) deflator, has slowed sharply over the past year and is now running below the fomc ’ s expressed goal of 2 percent. much of the slowing of total inflation is due to declining energy prices resulting from the weakening of global growth mentioned earlier combined with increased energy production here in the u. s. however, it is also the case that core inflation, that is, excluding food and energy, has slowed sharply as well. a decomposition of the slowing in core inflation reveals that some of it is due to slowing in the rate of increase in prices of non - food and non - energy goods. this probably is due in large part to the softening of global demand for goods and the modest appreciation of the dollar that has occurred since mid - 2011. in the service sector, the rate of increase in prices of medical services and “ non - market ” services – the latter includes some financial services – also has slowed notably recently. in contrast, the rate of increase in prices for other non - energy services has been relatively stable. comparing this set of conditions to that in 2010, the recent slowing of inflation has been less widespread across core goods and core services, and inflation expectations so far have declined less appreciably than they did in 2010. thus, my best guess is that core goods prices will begin to firm in the months ahead as global demand begins to strengthen and inventories get into better alignment with

repay debt. the subprime guidance emphasizes the risks of stated income or reduced documentation loans in the subprime sector. further, the subprime guidance outlines certain practices that are considered predatory in nature and stipulates that institutions should not engage in these practices regardless of loan features. also, in 2005 the federal reserve and the other banking agencies issued the interagency guidance on independent appraisal and evaluation functions. this statement reinforces the importance of appraiser independence from the loan origination and credit decision process to ensure that valuations are fairly and appropriately determined. independence has been a core principle in the board's appraisal regulation and guidance, which have been in place since the early 1990s. when we examine a bank's real estate lending activities, examiners consider the adequacy of the appraisal function to ensure that it complies with the appraisal regulation and has appropriate risk management practices. a strong appraisal function is essential to combating the potential for mortgage fraud by protecting the collateral valuations from influence by individuals whose intent is to deceive the lender about the condition and value of the collateral. the agencies took steps to further strengthen their guidance in this area by proposing interagency appraisal and evaluation guidelines last november. more recently, the collapse of the global credit market, triggered by the end of housing booms in the united states and other countries and the associated problems in mortgage markets, has led to a deterioration of asset values and credit conditions. as a result, financial institutions have incurred losses that in and of themselves have caused financial institutions to tighten credit underwriting standards to ensure that borrowers have the capacity to repay. furthermore, sweeping new rules issued by the board under its authority in the home ownership and equity protection act ( hoepa ) will further ensure that mortgage lenders that offer high - cost mortgages have appropriate practices to ensure consumers can repay their loans. consumer compliance examination and enforcement the federal reserve conducts regular examinations of state member banks to evaluate compliance with consumer protection laws, the fair lending laws, and the community reinvestment act. these examinations are conducted by a specially trained cadre of examiners for the approximately 875 banks we supervise. the board has a long - standing commitment to ensuring that every bank it supervises complies fully with federal financial consumer protection laws, including the fair lending laws. the scope of these examinations includes a review of the bank's compliance with the truth in