in the second quarter, leaving it at 5. 2 percent in june. this revision suggests that household resources for future consumption are actually in good shape, although data and anecdotal evidence suggests lower - income groups are struggling. these revisions suggest that the economy is much stronger than previously thought, with little indication of a major slowdown in economic activity. that outlook is supported by consumer spending that has been and continues to be strong. though the growth in personal consumption expenditures ( pce ) has moderated since the second half of 2023, it has continued at an average pace of close to 2. 5 percent so far this year. also, my business contacts believe that there is considerable pent - up demand for durable goods, home improvements, and other big - ticket items, demand that built up due to high interest rates for credit cards and home equity loans. 1 / 6 bis - central bankers'speeches now that rates have started to come down and are expected to come down more, consumers will be eager to make those purchases. for business spending, purchasing managers for manufacturers describe ongoing weakness in that sector, but those for the large majority of businesses outside of manufacturing continue to report a solid expansion of activity. now let's talk about the labor market. only a couple months ago, it appeared that the labor market was cooling too quickly. low numbers for job creation and a jump in the unemployment rate from 4. 1 percent in june to 4. 3 percent in july raised risks that the labor market was deteriorating. to remind you of how bad the markets viewed the july data, some fed watchers were calling for an emergency fomc meeting to discuss a rate cut. while the unemployment rate ticked down in august, job growth was once again well below expectations. many were arguing that the labor market was on the verge of a serious deterioration and that the fed was behind the curve even after a 50 basis point cut in the policy rate at the september fomc meeting. then we got the september employment report. job creation in september was unexpectedly strong at 254, 000 and the unemployment rate fell back down to 4. 1 percent, which is where it was in june. the report also showed big upward revisions to payroll gains for the previous two months. together, the message was loud and clear : while job creation has moderated and the unemployment rate has risen over the past year, the labor market remains quite healthy. along with other new data on the labor market, the evidence is that

aspect of the budget and its economic impact. the unified budget deficit, projected forward a certain number of years, is an important measure that is already included in the congressional budgeting process. however, the unified budget deficit does not fully capture the fiscal situation and its effect on the economy, for at least two reasons. cbo ( 2005 ), the long - term budget outlook, p. 3. i discussed this issue in ben s. bernanke ( 2006 ), " the coming demographic transition : will we treat future generations fairly? ", speech delivered before the washington economic club, washington, october 4, www. federalreserve. gov / boarddocs / speeches / 2006 / 20061004 / default. htm. first, the budget deficit by itself does not measure the quantity of resources that the government is taking from the private sector. an economy in which the government budget is balanced but in which government spending equals 20 percent of gdp is very different from one in which the government's budget is balanced but its spending is 40 percent of gdp, as the latter economy has both higher tax rates and a greater role for the government. monitoring current and prospective levels of total government outlays relative to gdp or a similar indicator would help the congress ensure that the overall size of the government relative to the economy is consistent with members'views and preferences. second, the annual budget deficit reflects only near - term financing needs and does not capture longterm fiscal imbalances. as the most difficult long - term budgetary issues are associated with the growth of entitlement spending, a comprehensive approach to budgeting would include close attention to measures of the long - term solvency of entitlement programs, such as long - horizon present values of unfunded liabilities for social security and medicare. to summarize, because of demographic changes and rising medical costs, federal expenditures for entitlement programs are projected to rise sharply over the next few decades. dealing with the resulting fiscal strains will pose difficult choices for the congress, the administration, and the american people. however, if early and meaningful action is not taken, the u. s. economy could be seriously weakened, with future generations bearing much of the cost. the decisions the congress will face will not be easy or simple, but the benefits of placing the budget on a path that is both sustainable and meets the nation's long - run needs would be substantial. thank you again for allowing me to comment on