opinion survey indicates that, while the absolute level of lending standards remains tight, banks did begin to ease standards somewhat in the second half of 2010. the pick - up in the economy has occurred despite renewed weakness in the housing market. home prices have softened anew and construction activity remains stuck at a very low level, likely reflecting the continued large supply of unsold homes. we believe that it will take more time, perhaps as much as another year, for enough of these homes to be bought that residential construction might begin a meaningful recovery. on the labor front, the most recent employment report for january 2011 is quite difficult to interpret. only 36, 000 nonfarm payroll jobs were added, well below expectations. yet, we get a very different perspective from the unemployment rate, which fell by 0. 4 percentage points for the second month in a row and now stands at 9. 0 percent. job growth was undoubtedly held down by the severe winter storms that affected many major cities, including our own. bis central bankers ’ speeches the decline in the jobless rate was not an unmitigated positive, as a significant part of this decline was due to fewer people looking for work. thus, neither the disappointingly slow job growth nor the welcome steep drop in unemployment seems to paint the full picture. the truth lies somewhere in between. despite the stronger job growth that we expect in the months ahead, we will continue to have a substantial amount of slack in our labor markets that will take time to absorb. at this point, while the soft patch is over and the risk of a double dip has subsided, the economy still faces headwinds as a result of the aftermath of the financial crisis, the housing bust and the high level of unemployment that still prevails. as banks and other financial institutions seek to strengthen their balance sheets and avoid future credit losses, they may keep credit conditions tighter than normal. in addition, many consumers ’ borrowing options may be limited by their impaired credit histories, and the recovery is not getting the strong boost from home construction that most previous recoveries have benefited from. furthermore, as i will discuss later, households are still feeling the financial impact of lost wealth and jobs, which makes some cautious about spending and investing. the economy is healthier, but it is not yet well. in order to reduce joblessness significantly over the coming quarters, the economy needs to grow at a considerably faster rate than we have seen so far in this recovery. i am happy to say

and arizona. this relationship can also be seen within our region. for example, household debt grew more slowly than nationally and has remained relatively low in upstate new york, which was largely bypassed by the housing boom. the key exception is new york city, where a large share of residents rent their homes. overall, city residents still have relatively low levels of mortgage debt, even though these debt levels rose during the run - up to the recession. elsewhere in the region, debt levels tended to rise most in places where housing prices increased the most, such as long island and parts of new jersey. during the crisis, in most parts of our region, households reduced their debts. but, because they had not accumulated as much during the run - up, the decline was well below the national average. in general, households in our region – with some exceptions that i will mention in a moment – have not been under as much pressure to deleverage. it ’ s particularly notable that in upstate new york, where debt levels are well below the national level, households have actually continued to very slowly add to their debt. clearly, deleveraging has not been particularly consequential for many upstate new york households. the deleveraging process bis central bankers ’ speeches in other parts of new york and new jersey, while quite severe by historic standards, has proved milder than elsewhere in the nation. nevertheless, many families in the region have had to make painful adjustments to their spending in order to pay down debts. these families tend to be concentrated in neighborhoods where households took on more debt during the run - up or sustained more severe income losses during the crisis. these factors contribute to delinquency rates that run well above average in certain areas, including certain parts of new york city and long island. in fact, some neighborhoods in these areas now have delinquency rates two to three times the national rate. looking forward, we see some signs that the region is turning the corner on the credit cycle. after declining during the crisis, credit applications have begun to increase, suggesting that the demand for credit is rising. although housing debt is still declining and delinquencies are still high, households in many parts of the region have sought and taken on some new debt in recent months. in particular, auto debt has been rising over the past year across new york, northern new jersey and puerto rico – a signal that households in the region once again want to increase spending on durable goods, and are