richard h clarida : outlook for the us economy and monetary policy speech by mr richard h clarida, vice chairman of the board of governors of the federal reserve system, at the peterson institute for international economics, washington dc, 25 october 2018. * * * i see some familiar faces in the audience, and i am delighted to be at peterson today to offer my first public remarks since being sworn in last month as vice chairman of the federal reserve board. as some of you know, i have been a student of u. s. monetary policy for more than 30 years. so, for me, personally, it is a distinct honor and real privilege to have the opportunity to serve with my colleagues on the board of governors and, along with the 12 reserve bank presidents, on the federal open market committee ( fomc ). now, of course, i fully realize that i have participated in just one fomc meeting to date, so my remarks today will not come with a patina earned from long experience as a monetary policymaker. that said, i thought it might be of interest to share my thinking on the current state of the u. s. economy, to explain how it informed my support for the fomc ’ s policy decision last month, and to discuss my views on the way forward for u. s. monetary policy. 1 the economic expansion in year 10 the u. s. economic expansion, now in its 10th year, is marked by strong growth in the gross domestic product ( gdp ) and a job market that has been surprising on the upside for nearly two years. it is impossible today to know with much precision how much of the pickup in growth and the decline in unemployment that we have seen over the past two years is structural and how much is cyclical. most likely, both factors are at work. that said, based on my reading of the accumulating evidence, i believe that trend growth in the economy may well be faster and the structural rate of unemployment lower than i would have thought several years ago. let me elaborate. first, let ’ s look at the demand side of the economy. consider the benchmark revisions to the household saving rate. recently revised commerce department data now show that the aggregate household saving rate is running at 6. 7 percent of disposable income. this revised estimate is nearly double the previous estimate. the higher level suggests that, in contrast to the previous economic expansion from 2001 to 2007, when households were

club, the federal reserve was created more than a century ago during an era of government reform to serve the public interest. the structure established for the federal reserve back then intentionally insulates us from short - term political pressures so we can focus on what ’ s best for the american economy in the longer run. i promise you, with the sometimes imperfect information and evidence we have available, we will do just that by making the best decisions we can, as objectively as we can. thank you. i welcome your questions. 1 our objective is 2 percent inflation as measured by the annual change in the price index for personal consumption expenditures published by the commerce department ’ s bureau of economic analysis. 2 other factors depressing the neutral rate include housing construction and lackluster exports. housing still hasn ’ t fully recovered from the financial crisis, in part because mortgage - qualification standards remain tight. weak growth abroad in europe, china, and elsewhere, some of which is related to their own productivity challenges, has hurt sales of u. s. goods. 5 / 5 bis central bankers'speeches