that the higher productivity growth alone could not fully account for. the balance between supply and demand can be inferred from movements in utilization rates, specifically in the unemployment rate. when actual output is expanding at the same pace as potential, the unemployment rate will be stable. when output growth outpaces the growth of potential, the unemployment rate declines. and the unemployment rate has declined almost 0. 4 percentage points a year for the past four years. this translates into excess demand growth of 0. 75 to 1 percentage point relative to potential supply growth. the second insight - and enduring old economy wisdom - is that a proximate source of changes in inflation is an imbalance between the levels of aggregate supply and aggregate demand. this can be expressed as an imbalance between actual and potential output or as a divergence of the unemployment rate from the nairu. the imbalance between the growth rates of aggregate supply and demand is, of course, the source of changes in the balance between the levels of aggregate demand and supply. but inflation is related directly to the levels not to the growth imbalance. and, even in the new economy, excess aggregate demand ultimately drives up inflation. thus the limits may have changed, but the consequences of overtaxing the limits remain the same. do we have excess aggregate demand? in my judgment, we have excess demand conditions in the labor market. the central tendency for my estimate of the nairu is in the range of 5 % to 5¼ %, compared to the 4. 1 % current unemployment rate. this estimate is consistent with most large - scale macroeconometric models and with the estimates of the nairu that underlie the economic and budget projections of both the council of economic advisers and the congressional budget office, but there is nonetheless legitimate uncertainty about the estimate of the nairu. this uncertainty has been, in my view, an important consideration in the way monetary policy has responded to recent economic developments. obviously, whether the nairu is closer to 4 % or to 5 % affects the difficulty associated with rebalancing supply and demand to contain the risk of higher inflation. but why has inflation remained moderate if there is persistent excess demand in the labor market? this is still another supply and demand story. the economy is subject to two fundamental types of aggregate economic shocks : supply shocks and demand shocks. these two types of shocks give rise to different challenges for monetary policy. supply shocks come in two varieties : relative price shocks ( such as changes in

may have to make time - consuming calls to get the lights turned back on, while also struggling to pay the associated overdraft fee. that may, in turn, lead to a vexing chain of additional late payments and fees. a 2013 study by the bureau of consumer financial protection found that more than a quarter of checking accounts in the study experienced at least one overdraft fee in 2011. 19 the average fee total for overdrawn accounts was $ 225, but varied as much as $ 200 between banks. among bank customers who bounced checks, a relatively small minority bore the brunt of the fees : a quarter of see, e. g., “ what is driving the ‘ unbanking of america ’? ” national public radio, fresh air, january 10, 2017, https : / / www. npr. org / 2017 / 01 / 10 / 509126878 / what - is - driving - the - unbanking - of - america, cited in wall, “ fintech and financial inclusion, ” https : / / www. frbatlanta. org / cenfis / publications / notesfromthevault / 08 - fintech - and - financial - inclusion - 201708 - 30. aspx # _ edn6. bureau of consumer financial protection, “ cfpb study of overdraft programs, ” white paper ( june 2013 ), https : / / files. consumerfinance. gov / f / 201306 _ cfpb _ whitepaper _ overdraft - practices. pdf. the findings here refer to banks in the study “ that tracked all incidences for all accounts opened at any time during 2011. ” - 8accounts with overdrafts incurred in 2011 had more than 10 overdraft fees during that year. 20 it is increasingly clear that financial inclusion is less about account access and more about families ’ financial resilience in the face of volatile income and expenses. it is common to assess households ’ earnings and living expenses in terms of annual totals. but what keeps many people up at night is their ability to pay this week ’ s bills, especially when their paycheck is not coming until next week. the u. s. financial diaries project finds that the low - and moderate - income families studied experienced fluctuations in income either 25 percent above or below average for five months over the course of a year. nearly a third of households whose