and federal reserve board, statistical release z. 1,'financial accounts of the united states.'figure 2 banks'cet1 risk - based capital ratio ratio q4 quarterly u. s. g - sibs large non – g - sibs other bhcs note : the data are seasonally adjusted by federal reserve board staff. the sample consists of domestic bank holding companies ( bhcs ) and intermediate holding companies ( ihcs ) with a substantial u. s. commercial banking presence. u. s. g - sibs are u. s. global systemically important banks. large non - g - sibs are bhcs and ihcs with greater than $ 100 billion in total assets that are not g - sibs. cet1 stands for common equity tier 1 capital, which is the numerator of the cet1 ratio. before 2014 : q1 ( advanced - approaches bhcs ) or before 2015 : q1 ( non - advanced - approaches bhcs ), the numerator of the cet1 ratio is approximated by tier 1 common capital. the denominator is risk - weighted assets. the shaded bars indicate periods of business recession as defined by the national bureau of economic research : march 2001 - november 2001, december 2007 - june 2009, and february 2020 - april 2020. source : federal reserve board, form fr y - 9c, consolidated financial statements for holding companies. may 07, 2024 figure 3 uninsured deposits percent of assets quarterly q4 u. s. g - sibs large non - gsibs regional note : uninsured deposits are reported by banks with total assets above $ 1 billion. for smaller banks, uninsured deposits are estimated based on the amount in large deposit accounts, excluding the first $ 250, 000 in each of those accounts. u. s. g - sibs are u. s. global systemically important banks. large non - g - sibs are bank holding companies and intermediate holding companies with greater than $ 100 billion in total assets that are not g - sibs. regional are banks with between $ 10 billion and $ 100 billion in total assets. source : federal reserve board staff calculations based on federal reserve board, form fr y - 9c, consolidated financial statements for holding companies and federal financial institutions examination council, call report form ffiec 031, consolidated reports of condition and income ( call report ). figure 4 commercial real estate loans

. i will first address the effect of productivity on costs, returning later to the link of productivity and the output gap. labor costs account for the lion ’ s share, about two - thirds, of the cost of producing goods and services. the labor cost of producing a unit of output depends, first, on the dollar cost per hour ( including wages and benefits ) of employing a worker and, second, on the quantity of output that each worker produces per hour. when the cost per hour of employing a worker rises more quickly than the worker ’ s hourly productivity - the historically normal situation - then the dollar labor cost of producing each unit of output, the so - called unit labor cost, tends to rise. recently, however, labor productivity has grown even more quickly than the costs of employing workers, with the result that unit labor costs have declined in each of the past three years. indeed, in the second and third quarters of 2003, unit labor costs in the nonfarm business sector are currently estimated to have declined by a remarkable 3. 2 and 5. 8 percent, respectively, at annual rates. again, because labor costs are such a large part of overall costs, and because capital costs have also been moderate, the business sector has enjoyed a net decline in total production costs. a decline in production costs must result in lower prices for final consumers, an increased price - cost markup for producers, or both. in practice, both have occurred in recent years : firms have passed on part of the reduction in costs on to final consumers in the form of lower ( or more slowly rising ) prices, and pricecost markups ( as best we can measure them ) have risen well above their historical averages. the high level of markups is an important and perhaps insufficiently recognized feature of the current economic situation. to the extent that firms can maintain these markups, profits will continue to be high, supporting investment and equity values. to the extent that product - market competition erodes these markups, as is likely to occur over time, downward pressure will be exerted on the inflation rate, even if, as is likely, the recent declines in unit labor cost do not persist. 2 the third unusual factor is the persistent softness of the labor market. as i already noted, fully two years after the official recession trough, we are only just beginning to see significant gains in employment. of course, the unemployment rate, at about 6 percent of the labor force, is not exceptionally high