. productivity growth has also been quite low. in the period before the crisis ( 2003 to 2008 ), u. s. nonfarm productivity growth averaged 2 percent per year. since 2010, productivity has been closer to 1 percent. while some of this decline can be explained by lower capital spending, the decline is difficult to fully explain. another explanation some have offered is that there is a measurement problem – we are understating output growth and overstating price inflation. this type of issue, long flagged as a hedonic adjustment, seems most credible in particular market segments, such as in healthcare. alan blinder has posed this question : would you rather have 1970 healthcare at 1970 prices or 2016 healthcare at 2016 prices? based on the measurement of prices, 1970 healthcare is a much better deal. yet, when offered this choice, almost all choose 2016 healthcare. why? the reason is that people highly value the advances in healthcare technology, such as in cardiac care, or in the procedures that are practical today, such as hip and knee replacement, that simply weren ’ t available 50 years ago. bis central bankers ’ speeches u. s. economic performance has also been held back by developments in the rest of the world. growth outside of the united states has slowed. in the euro area, comparing the period from 2003 to 2008 to the period from 2010 to 2015, annual real gdp growth slowed from 1. 9 percent to 0. 8 percent. japanese growth has remained muted over these periods at 0. 1 percent and 1. 0 percent respectively. in china, reported growth rates over these two periods slowed from 11. 3 percent to 8. 3 percent. these developments, along with policy and risk events that have increased demand for u. s. assets, have contributed to significant u. s. dollar appreciation over the last two years. this dollar strength has created competitive challenges for u. s. exporters, especially in manufacturing, and has caused the trade sector to be a drag on u. s. economic activity. looking forward, despite the fact that u. s. economic growth has been disappointing, we have actually made considerable progress toward our monetary policy objectives. the united states is quite close to its employment and inflation objectives. on employment, there still seems to be a bit of slack in the u. s. labor market. but, that margin has shrunk greatly over the past few years. payroll gains have been at least as robust as anticipated. on inflation, we

speeches mostly returned to normal. 1 and the economy grew far faster than anyone expected last year. labor supply has been boosted by an increase in labor force participation among individuals aged 25 - 54 years, as well as by increased immigration flows. at the same time, the labor market has remained strong. the unemployment rate has been under 4 percent for more than two years, which is the longest stretch at that rate in over 50 years - even longer ago than the release of pink floyd's " dark side of the moon. " inflation has come down substantially, too. the 12 - month percent change in the personal consumption expenditures ( pce ) price index has continued to decline, falling from its 40 - year high of above 7 percent in mid - 2022 to 2 - 1 / 2 percent in the latest reading. all in all, there has been tremendous progress toward better balance. but this episode is not yet over, and i am still very focused on ensuring we achieve both of our goals. a better - balanced labor market i'm going to delve further into the trends underlying both sides of our dual mandate, starting with employment. when the u. s. economy recovered from the pandemic, the labor market turned red - hot. demand for workers far exceeded supply, and that imbalance contributed to rapid wage growth and high inflation. now, the labor market has shown signs of returning to something closer to normal. nationally, many indicators - such as quits rates and surveys of perceptions of availability of workers and jobs - have returned to ranges seen before the pandemic. the current unemployment rate of 3. 8 percent equals my estimate for the unemployment rate that is likely to prevail over the longer run, and job growth continues to be solid. the story in the federal reserve's second district - an area with similar boundaries to that of the federal home loan bank of new york - is much like the national one. our business contacts indicate that here, too, labor demand and supply are moving into better balance. in particular, we are hearing from businesses that it is becoming less difficult to find qualified workers. despite the progress in restoring balance, two important indicators point to lingering tightness in the labor market : job openings and wage growth. job vacancies, which reached record highs in 2022, have trended lower since then, but are still quite elevated relative to pre - pandemic norms. and while we have seen measures of wage growth come down from their