about? that is not yet clear. there are four key prices that will determine the extent of the re - balancing that occurs. they are the sterling exchange rate, the oil price, real wages, and interest rates. it is these prices that will provide the incentives for the required shift in resources. let me consider them in turn. of course there are many exchange rates for sterling against different currencies, but the relative strength of sterling and the dollar against the euro has been surprising. over the past five years or so, sterling has risen by almost 40 % against the euro. no doubt part of this euro weakness is accounted for by the strength of domestic demand in the us and uk, which, at least in the case of the us, has been driven by higher productivity growth. but the resulting current account deficits cannot be sustained at their present levels indefinitely. following the sharp slowdown of the world economy last year, it is those countries with the largest current account deficits, the us and uk, which are experiencing a more robust recovery than that in countries, such as the euro area and japan, with current accounts close to balance or in surplus. in the short run, this pattern of growth could exacerbate current account imbalances. but it is encouraging that the slowdown has proved more short - lived than was feared. us gdp growth was positive in the final quarter of last year, following only one quarter of falling output, and is expected to be substantially positive in the first quarter of this. here at home, growth is expected to be positive in the first quarter, following one quarter of growth close to zero. and manufacturing output has now started to rise in both the us and uk. surveys of business confidence have turned round markedly. only last november, the monetary policy committee concluded that it was very unlikely that business confidence would bounce back as it did in 1998. but the quarterly survey of the british chambers of commerce, published last thursday, showed that manufacturing confidence had returned to levels last seen in 2000, and there were further improvements in the services sector. and the cbi survey, published this morning, showed the highest level of business optimism for eight years. so the recent news has been encouraging. it is still too soon though to be confident that recovery is entrenched. the sharp inventory run down of last year appears to have come to an end, but investment has not yet picked up, either in the uk or the us. and consumption, which has

the data for july 2024 are estimates based on consumer price index and producer price index data. the outlined shaded bar indicates a period of business recession as defined by the national bureau of economic research : february 2020 - april 2020. pce is personal consumption expenditures. the dashed line is at the 2 percent longer - run inflation target. source : bureau of economic analysis, pce, via haver analytics. public figure 2 unemployment rate hiring and quits rates percent percent hiring rate quits rate note : the data are monthly and extend through july 2024. the outlined shaded bar indicates a period of business recession as defined by the national bureau of economic research : february 2020 - april 2020. the unemployment rate peaked at 14. 8 percent in april 2020. unemployment rates for april - july 2020 are omitted for readability. source : bureau of labor statistics via haver analytics. note : the data are monthly and extend through june 2024. rates are measured as percent of private employment. the outlined shaded bar indicates a period of business recession as defined by the national bureau of economic research : february 2020 - april 2020. source : bureau of labor statistics via haver analytics. public figure 3 civilian labor force millions staff estimate pre - pandemic trend note : quarterly and seasonally adjusted data extending through 2024 : q2. the black line is a federal reserve board staff estimate of the labor force, making two adjustments to the bureau of labor statistics ’ published estimates : ( i ) reweighing current population survey respondents such that the labor force estimates in all years reflect the census bureau ’ s latest population estimates ; and ( ii ) accounting for net immigration that is likely not fully reflected in the census bureau ’ s latest population estimates, as detailed in the congressional budget office ’ s ( cbo ) the demographic outlook : 2024 to 2054, https : / / www. cbo. gov / publication / 59899. the pre - pandemic trend is calculated by appending the cbo ’ s january 2020 projected labor force growth from the start of the pandemic through 2024 : q2 onto the level of the labor force just before the start of the pandemic. the outlined shaded bar indicates a period of business recession as defined by the national bureau of economic research : february 2020 - april 2020. source : bureau of labor statistics via haver analytics ; cbo ; federal reserve board staff calculations. public figure 4 global supply chain pressure index standard deviations from average value