, liquidity swaps with other central banks declined from a peak occasioned by the financial crisis of $ 583 billion the week ended dec. 10, 2008, to $ 330 billion the following march, thus somewhat mitigating the growth of our balance sheet over that period. 3 from my perch, i considered a balance sheet of $ 2 - plus trillion and a base lending rate of 0 - to - 1 / 4 of 1 percent more than sufficient to stimulate not just the housing market but the stock market, too, thus placing us on the path of what economists refer to as “ the wealth effect ” – the working assumption that rising prices for homes, stocks and bonds floats the income boat of all americans. i basically said so publicly on march 26, 2009, in a speech to the rise forum, an annual student investment conference. at the time, the s & p 500 was priced at 814, the nasdaq at 1, 529 and the dow at 7, 750. the mindset of investors at that moment was summarized at an earlier fomc meeting by one of my most esteemed colleagues at the fed, who quipped that in looking at the balance sheets of most financial institutions, “ nothing on the right is right and nothing on the left is left ”. as i looked at the faces of the students gathered in that vast auditorium, i could see in their eyes a reflection of the gloom and doom of the time. here is what i told these young investors that dark morning : “ … the current economic and financial predicament represents a potential gold mine rather than a minefield. historically, great investors have made their money by climbing a wall of worry rather than letting a woeful consensus cow them. … your job as investors is … to ferret out from the generalmarket malaise good financial and business operators whose franchises and prospects are overdiscounted at current prices. were i you … i would be licking my chops at the opportunities that always abound in times of adversity. … there are a lot of dollar bills that can be found in the debris of the current markets that can be picked up for nickels and dimes. ” of course, i would not mention this today had i been wrong! currently, the right hand side of the balance sheet of most any well - managed market - traded business is chock - full of restructured, cheap debt and leaner common stock, while the left side is bulging

and businesses at risk of a future storm. while a once - in - a - hundred - year risk of flooding may not appear worrisome, many within this expanded zone may be required to purchase insurance. the expanded flood zones, coupled with federal government efforts to have insurance premiums accurately reflect the risk, could create a serious affordability problem in the years ahead. the new york fed has created maps of community - level flood risk in brooklyn. now i would like to turn my attention to recent developments in the national economy. national economic conditions from the end of the great recession in mid - 2009 through mid - 2013, real gross domestic product, or the aggregate value, after adjusting for inflation, of all the goods and services produced within the borders of the u. s., grew at a rather tepid 2 1 / 4 ; percent annual rate. then, in the second half of 2013, the pace of growth moved notably higher, reaching an annual rate of 3 1 / 4 percent. nonetheless, despite this pickup in the growth pace, the average monthly gains in nonfarm payroll employment were somewhat lower in the second half of the year compared to the first half. at the same time, both total and core inflation, as measured by the personal consumption expenditures ( pce ) deflator, slowed in the second half of 2013 relative to the first half, and the overall pce deflator index is currently running well below the fomc ’ s expressed goal of 2 percent for total inflation. combined with the still - elevated unemployment rate and the drop in the labor force participation rate, these conditions suggest that there continues to be a substantial underutilization of both labor and capital resources. this implies, in turn, that the current, highly - accommodative stance of monetary policy will remain appropriate for a considerable time to come. let me elaborate on these points. bis central bankers ’ speeches while the timing and magnitude of the pickup of growth were earlier and somewhat stronger than our internal forecast, in qualitative terms the economy has performed much as we expected. first, by several measures, households ’ balance sheets are in much better shape, and this has led to faster growth of consumer spending, particularly for durable goods. key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. reflecting rising equity and home prices and declining debt, household net worth relative to disposable income has climbed back to its average