can be seen clearly in the downward revisions to analysts'long - term earnings expectations ( which mirrored declines in equity prices ) beginning in the second half of 2000. analysts'forecasts of long - term earnings growth for the standard & poor's 500 companies index declined from about 15 percent per year at their peak in 2000 to less than 12 percent recently ( still a historically high level, however ). indeed for this period, augmenting the tevlin - whelan model of investment with analysts'long - term expectations substantially improves the fit - although it by no means eliminates all or even most of the puzzle in investment spending during this period. using panel data, cummins et al. ( 2002 ) show that analysts'earnings expectations provide useful information in investment equations. as management expectations changed, so did the economic environment and firms'investment behavior. replacement cycles for high - tech equipment apparently slowed, as firms became more skeptical of the business case for next - generation computers and software - particularly since they had just upgraded their information technology in preparation for the y2k date change. moreover no " killer apps " that required further system upgrades seemed to be on the horizon. the failures of scores of dot - coms and telecom startups reduced competitive pressure and the perceived urgency of maintaining technological leadership. both financial markets and the general economy were becoming decidedly less hospitable to firms oriented toward new technologies. in short, a major shift in management expectations about the profit potential of new investments, particularly high - tech investments, is key to explaining the investment bust of 2000 - 02. a capital overhang? the factors just discussed, including the re - evaluation of the long - term profitability of high - tech investments, go a long way toward explaining the decline in investment spending that began in the latter part of 2000. however, some observers have suggested that the problem is deeper and has longer - term consequences than i have suggested so far. specifically, they have argued that investment during the late 1990s was so great that actual capital stocks rose substantially above longrun desired levels, creating a " capital overhang. " barring a major increase in the desired level of capital, a true capital overhang would imply little or no investment in that particular type of capital for possibly quite a long time, until excess capital has been depreciated away. is there a capital overhang in the us economy? i believe that this description was a reasonable one for certain sectors during the early stages of

started to ease as it observed a lessening in inflation concerns, left rates unchanged for three meetings as it waited for more information, and then continued to ease. lessons for current monetary policy with the knowledge of past experiences in hand, let me say a few words about the current monetary policy cycle and the extent to which future policy is likely to resemble, if at all, past experiences. between march 2022 and july 2023, the fomc raised the target range for the federal funds rate 5 - 1 / 4 percentage points. our strong actions have moved our policy rate well into restrictive territory, and our restrictive stance of monetary policy is putting downward pressure on economic activity and inflation. if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year. 4 / 6 bis - central bankers'speeches getting back to the title of my talk today : will this time be different? my answer is, of course it will. every time is different. but we can still learn from past episodes. we cannot know if there will be unanticipated exogenous shocks that require a policy response different from what will be envisaged at the beginning of the easing cycle. all we can do is assess the risks as best we can, given the available information and our best forecasts. in the absence of unanticipated exogenous shocks, policymakers can weigh multiple factors, including keeping policy restrictive enough to tamp down a possible resurgence of inflation due to the strength of aggregate demand or easing sooner to avoid an undue increase in unemployment. unfortunately, the history that i have reviewed today suggests that we should not be surprised if some kind of unanticipated shock occurs. given that we must accept that uncertainty is present, we consider the risks that can affect our outlook and forecasts. looking ahead, i see at least three key risks. first, as i mentioned at the beginning, consumer spending could be even more resilient than i currently expect it to be, which could cause progress on inflation to stall. second, employment could weaken as the factors supporting economic growth fade. third, geopolitical risks could remain elevated, and a widening of the conflict in the middle east could have greater effects on commodity prices, such as oil, and on global financial markets. i remain cautiously optimistic about our progress on inflation, and i will be reviewing the totality of incoming data in assessing the economic outlook and