tech. 7 both phenomena are closely related to the declining trend in new business creation. 8 are we doomed to slow productivity growth for the foreseeable future? we don ’ t know. 9 on the encouraging side, the technological frontier appears to be advancing rapidly in some sectors, and there are hints that the firm start - up rate is improving. 10 on the more discouraging side, investment continues to disappoint – and so the current capital stock is smaller and embodies fewer frontier technologies than might otherwise be the case – and the productivity slowdown is a global phenomenon, suggesting that it may not be easily or quickly remedied. eugenio pinto and stacey tevlin ( 2014 ), “ perspectives on the recent weakness in investment, ” feds notes ( washington : board of governors of the federal reserve system, may 21 ). for example, robert gordon ( 2016 ) argues forcefully in his recent book, the rise and fall of american growth : the u. s. standard of living since the civil war ( princeton, n. j. : princeton university press ), that slow productivity growth is likely to persist. see ryan a. decker, john haltiwanger, ron s. jarmin, and javier miranda ( 2016 ), “ changing business dynamism : volatility of shocks vs. responsiveness to shocks? ( pdf ) “ unpublished paper, april. see ryan a. decker, john haltiwanger, ron s. jarmin, and javier miranda ( 2016 ), “ declining business dynamism : implications for productivity? ” unpublished paper, august ; and francois gourio, todd messer, and michael siemer ( 2016 ), “ firm entry and macroeconomic dynamics : a state - level analysis ( pdf ), ” finance and economics discussion series 2016 – 043 ( washington : board of governors of the federal reserve system, february ). there is no shortage of views on this issue among economists, but the views to some extent appear to depend on whether the economist making the prediction is an optimist or a pessimist. for the record, i note ( a ) that looking ahead, i expect gdp growth to pick up in coming quarters, as investment recovers from a surprisingly weak patch and the drag from past dollar appreciation diminishes, and ( b ) that i am an optimist. see dan andrews, chiara criscuolo, and peter n. gal ( 2015

have with firms. it encapsulates our expert judgment of the firm and lets the firm know how its performance compares with our standards. and second, as discussed, ratings have material real - world consequences. a firm with unsatisfactory ratings faces significant competitive disadvantages relative to firms deemed to be satisfactory. as noted, these firms are prohibited from expanding their range of financial activities and will generally face headwinds in acquisitions. since the financial crisis, our supervisors have identified potential weaknesses at firms and encouraging them to address those weaknesses. and firms now have substantially stronger and more resilient risk - management systems. they are better able to identify, measure, and manage their risks. these improvements have not gone unnoticed. as our supervision report demonstrates, the overall ratings trajectory in the industry has been quite positive. 8 there are some straightforward steps we could take to simplify our ratings, with no loss of effectiveness. we already have a model for a simpler ratings framework. the new framework that applies to our largest firms, the lfi ratings framework, focuses on the three areas supervision and regulation report, https : / / www. federalreserve. gov / publications / files / 202011 - supervision - andregulation - report. pdf. - 11 that are the core of our supervisory focus : capital, liquidity, and governance. 9 we could consider a similar simplification to the rfi rating system that applies to less - systemic holding companies and the camels ratings system that applies to depository institutions. in terms of improving regulatory efficiency through ratings, being clearer to firms about how we apply these standards would help to promote a more efficient banking system. in particular, we could be clearer about how we weight the various factors that generate the rating. banks could benefit because they would be better positioned to anticipate supervisory feedback and understand what steps they need to take to improve their ratings. supervisors can benefit by being grounded in more predictable criteria. my concern is that, despite the fact that our examiners have used ratings for almost 100 years, we don ’ t have a particularly well - developed theory of ratings — principles regarding the internal processes and standards that promote consistency and predictability in our assessment of the condition of banks. as i ’ ve discussed, there is broad agreement that ratings are a beneficial, even necessary, part of bank supervision. yet we have very few studies or other empirical support for this conclusion. this stands in sharp contrast to the analysis behind the long list of