board of governors in washington, d. c. this unique governance structure requires that i forewarn you that the views i express are my own and do not necessarily reflect those of the federal reserve system or my colleagues on the federal open market committee ( fomc ). economic conditions the u. s. economy is now nearly five years into a recovery that began in june 2009. the recovery has been lackluster in many ways, yet it has made considerable progress nonetheless. the unemployment rate, for example, has fallen from its peak of 10. 0 percent to 6. 6 percent. employment gains have restored some 7. 8 million jobs since the trough, representing about 90 percent of the jobs lost since the peak. stock prices have recovered, bis central bankers ’ speeches housing prices are up, and earnings at many businesses are healthy. it is my general view that the u. s. economy is on firmer footing today than it has been in several years. this is a cause for some optimism for continued progress in 2014. in recent weeks, there has been a blizzard of economic reports, which have come in weaker than expected. i believe that weakness largely reflects the severe winter weather rather than a frozen recovery. so, we must be wary of attaching too much significance to the latest numbers. as a monetary policymaker, i prefer to take a longer view rather than let our decisions be whipsawed by the most recent statistics, which are often noisy and subject to revision. because monetary policy tends to work with a lag, we must keep our attention focused on the intermediate - to longer - term underlying trends if we are to make wise decisions. based on the latest gdp numbers revised last week, the u. s. economy performed noticeably better in the second half of 2013 than in the first half. specifically, real output grew at a 3. 3 percent pace in the second half of the year compared with 1. 8 percent in the first half. while this is far from the robust growth that many would like to see, it continues to represent steady progress and an improving economy. my forecast calls for about 3 percent growth in 2014. this is in line with the central tendency of 2. 8 to 3. 2 percent growth reported by my colleagues on the fomc in december 2013. there has been discussion of some recent weakness in consumer spending, housing starts, and housing sales. for instance, in january, total retail sales fell by 0. 4 percent ; housing starts dropped

become apparent. economic conditions so, let me begin with an overview of the u. s. economy. we are more than five years into a recovery that began in june 2009. while the pace has been sluggish and uneven, i believe the progress is undeniable. in fact, despite a winter cold spell in the first quarter, i remain mostly positive about the prospects ahead. the severe winter led to a decline in gross domestic product ( gdp ) during the first quarter of the year, but second - quarter growth rebounded to 4. 2 percent, according to the most recent estimate. this largely confirmed that the disappointing performance in the first quarter was mostly a temporary weather - related slowdown rather than a more persistent retrenchment in the ongoing recovery. in the second quarter, the strongest recoveries were in categories most directly affected by the first quarter ’ s severe weather, including investment in equipment, residential structures, inventory accumulation, and exports. exports declined sharply at an annual rate of 10. 1 percent in the first quarter and then jumped 9. 5 percent in the second. total private domestic investment fell 6. 9 percent in the first - quarter freeze but then grew 17. 5 percent during the second - quarter thaw. personal consumption, the largest spending sector of the economy, slowed during the first quarter to 1. 2 percent. in the second quarter, personal consumption growth approximately doubled to 2. 5 percent. durable goods, which advanced at an annualized rate of 14 percent, were the strongest component of personal consumption in the second quarter. i believe consumer and business spending will help real gdp to grow at about 3 percent for the remainder of this year and next before reverting to trend, which i see as about 2. 4 percent. the philadelphia fed ’ s manufacturing business outlook survey in our region has proven to be a reliable indicator of national manufacturing trends in the u. s. in august, the diffusion index of current activity increased for the third consecutive month and had its strongest reading since march 2011. the survey also indicated that expectations for manufacturing activity six months ahead remained strong. underlying details of the report included strong bis central bankers ’ speeches results for new orders and shipments. the current indicators for labor conditions also suggested continued expansion in employment. the employment index has been positive for 14 months, and the workweek index was positive for the sixth month. these data suggest continued improvement in u. s. labor market conditions, despite a somewhat softer august number yesterday, which showed