believe nairu is an important and useful concept ; and ( 2 ) i believe that nairu is lower recently than it had been in the 1980s. i believe nairu has declined from about 6 % at the end of the 1980s to about 5 ½ % currently. however, as has always been the case and is certainly true today, there is uncertainty about the precise estimate of nairu. clearly, many believe it is higher, as reflected in this table. some also believe it is lower. i constantly re - evaluate my own estimate of nairu in light of the recent data. how fast can the economy grow? the next question you asked is how fast the economy can grow. over the short run, that depends on the amount of slack in the economy. once the economy has moved to capacity, the maximum sustainable growth rate is limited by the rate at which productive capacity expands over time. this limit is generally referred to as trend growth. productive capacity expands both because of increases in physical inputs ( labor and capital ) and because of improvements in technology - - more people working with more and better equipment. once full employment is reached, the labor force expands with increases in the working age population, augmented by any trend in the labor force participation rate. the contribution of growth in 1nairu using cpi. current nairus for pce deflator and gdp deflator are 5. 3 and 5. 55 percent, respectively. capital stock and of technological improvements is summarized in the growth in labor productivity. the accompanying table also provides outside estimates of trend growth. note they all fall within a very narrow range, just above 2 % per year. there has been very little change in these estimates in recent years. about half of the increase in trend gdp is attributable to the long - term trend in labor force growth and about half to the long - erm trend in productivity growth. the narrowness of the range of estimates in this table should not suggest the absence of an important degree of uncertainty about trend growth and i will consider in the next section some reasons why trend growth could turn out to be higher. if output grows at the trend rate, resource utilization rates will generally be constant. if output grows faster than the trend rate, demand increases relative to supply and resource utilization rates will rise. at some point, above - trend growth will raise utilization rates to a point where excess demand puts upward pressure on inflation. note that trend growth does not cause inflation. the higher the trend rate

ben s bernanke : junior achievement finance park brief remarks by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the grand opening of the junior achievement finance park, fairfax, virginia, 19 october 2010. * * * financial education helps young people cultivate a sense of financial responsibility. it is essential for their personal well - being, and for the effective functioning of our economy. junior achievement was founded in 1919 and continues to be one of the world ’ s largest and fastest - growing organizations dedicated to educating youth in financial literacy, work readiness, and entrepreneurship. it is committed to relevant, hands - on learning for students from kindergarten through high school. it serves 10 million students each year in 121 countries – about 50, 000 of them here in the washington, d. c., area. i applaud junior achievement ’ s mission, which is to inspire and prepare young people to succeed in a global economy and cultivate their understanding of the principles of market - based economics and entrepreneurship. we are here today to discover junior achievement ’ s finance park in fairfax county. it is the 15th such facility in the united states and will serve 14, 000 students annually. the program offers an intensive six - week classroom curriculum, followed by a capstone day at the finance park where students participate in a practical personal budgeting simulation. this experiential facility helps students build financial skills that are essential to a successful financial future. students immerse themselves in reality - based decision making. they practice essential household skills by developing a budget that includes housing, transportation, food, utilities, health care, investments, philanthropy, and banking. the opportunity will enable them to better navigate real - life decisions. i applaud the ongoing partnership among junior achievement, schools, and businesses in the greater washington area. as states and school districts around the country continue to integrate personal finance instruction into their curricula, organizations like junior achievement can provide important services to both students and teachers. thank you for inviting me to participate in today ’ s event.