of governors of the federal reserve system, november ), www. federalreserve. gov / pubs / ifdp / 2011 / 1037 / default. htm. these calculations are based on federal reserve board estimates of fiscal impetus, which measures the boost to aggregate demand from increased government purchases as well as the effects of changes in tax and entitlement policies on consumer and business spending. see glenn follette and byron lutz ( 2010 ), “ fiscal policy in the united states : automatic stabilizers, discretionary fiscal policy actions, and the economy ”, finance and economics discussion series 2010 – 43 ( washington : board of governors of the federal reserve system, june ), www. federalreserve. gov / pubs / feds / 2010 / 201043 / 201043abs. html. bis central bankers ’ speeches indicates. but instead of contributing to growth thereafter, discretionary fiscal policy this time has actually acted to restrain the recovery. state and local governments were cutting spending and, in some cases, raising taxes for much of this period to deal with revenue shortfalls. at the federal level, policymakers have reduced purchases of goods and services, allowed stimulus - related spending to decline, and have put in place further policy actions to reduce deficits. i was relieved that the congress and the administration were able to reach agreement on avoiding the full force of the “ fiscal cliff ” that was due to take effect on january 1. while a long - term plan is needed to reduce deficits and slow the growth of federal debt, the tax increases and spending cuts that would have occurred last month, absent action by the congress and the president, likely would have been a headwind strong enough to blow the united states back into recession. negotiations continue over the extent of spending cuts now due to take effect beginning in march, and i expect that discretionary fiscal policy will continue to be a headwind for the recovery for some time, instead of the tailwind it has been in the past. a second tailwind in most recoveries is housing. residential investment creates jobs in construction and related industries. before the great recession, housing investment added an average of 1 / 2 percentage point to real gdp growth in the two years after each of the previous four recessions, considerably more than its contribution to growth at other times. 5 during this recovery, in contrast, residential investment, on net, has contributed very little to growth since the recession ended. the reasons are easy to understand, given

. the prolonged proximity of interest rates to the elb was at the heart of the monetary policy review and the changes we made to our framework in 2020. we will begin our next five - year review in the latter half of 2024 and announce the results about a year later. among the questions we will consider is the degree to which the structural features of the economy that led to low interest rates in the pre - pandemic era will persist. with time, we will continue to learn from the experience of the past few years, and what implications it may hold for monetary policy. these are just three of the many questions raised by these challenging times, and we are far from a complete understanding of the answers. i appreciate the opportunity to discuss these issues with you today and look forward to our conversation. opening remarks jerome h. powell chair board of governors of the federal reserve system at “ monetary policy challenges in a global economy, ” a policy panel at the 24th jacques polak annual research conference, hosted by the international monetary fund november 9, 2023