points below the peak level reached in 2000. labor force participation among 25 - to 54 - year - old men has risen by roughly 1 percentage point in the past several years. but it is still 2 percentage points below levels seen a decade ago, and it is 3 percentage points below the levels that prevailed in the late 1990s. as for productivity growth, there is considerable uncertainty about how much of the rebound in productivity growth that we have seen in recent quarters is cyclical and how much is structural. i believe both factors are at work. the structural, or trend, component of productivity growth is a function of capital deepening through business investment as well as a multifactor component sometimes referred to as the “ solow residual. ” initial estimates from the recent gdp release indicate that equipment and software investment in the third quarter moderated from the rapid pace recorded in the see the congressional budget office ’ s august 2018 projections for the nonfarm business sector at https : / / www. cbo. gov / system / files / 2018 - 08 / 51137 - 2018 - 08 - potentialgdp. xlsx. - 4first half of the year. one data point does not make a trend, but an improvement in business investment will be important if the pickup in productivity growth that we have seen in recent quarters is to be sustained. as for the economic outlook, in the most recent summary of economic projections ( sep ) released in september, participants had a median projection for real gdp growth of 3. 1 percent in 2018 and 2 - 1 / 2 percent in 2019. the unemployment rate was expected to decline to 3 - 1 / 2 percent next year. and, for total pce inflation, the median projection remains near 2 percent. with a robust labor market and inflation at or close to our 2 percent inflation goal and based on the baseline economic outlook for 2019 i have just laid out, i believe monetary policy at this stage of the economic expansion should be aimed at sustaining growth and maximum employment at levels consistent with our inflation objective. at this stage of the interest rate cycle, i believe it will be especially important to monitor a wide range of data as we continually assess and calibrate whether the path for the policy rate is consistent with meeting our dual - mandate objectives on a sustained basis. data dependence of monetary policy : what it means and why it is important economic research suggests that monetary policy should be “ data dependent. ” 3 and, indeed, central banks around the world, including

data dependent. u. s. monetary policy has for some time and will, i believe, continue to be data dependent in the sense that incoming data reveal at the time of each federal open market committee ( fomc ) meeting where the economy is at the time of each meeting relative to the goals of for example, long - term bond yields can be written as the sum of the expected path of the policy rate plus a term premium. the exchange rate between two countries can be written as the sum of the policy rate path differential between two countries plus a risk premium. so even for households and firms that do not directly care about the policy rate path, they do care about long - term bond yields and exchange rates that reflect this path. - 6monetary policy. this information on where the economy is relative to the goals of monetary policy is an important input into the policy decision. if, for example, incoming data in the months ahead were to reveal that inflation and inflation expectations are running higher than projected at present and in ways that are inconsistent with our 2 percent objective, then i would be receptive to increasing the policy rate by more than i currently expect will be necessary. data dependence in this sense is easy to understand, as it is of the type implied by a large family of policy rules in which the parameters of the economy are known. 5 but what if key parameters that describe the long - run destination of the economy are unknown? this is indeed the relevant case that the fomc and other monetary policymakers face in practice. the two most important unknown parameters needed to conduct - - and communicate - - monetary policy are the rate of unemployment consistent with maximum employment, u *, and the riskless real rate of interest consistent with price stability, r *. as a result, in the real world, monetary policy should, i believe, be data dependent in a second sense : that incoming data can reveal at each fomc meeting signals that will enable it to update its estimates of r * and u * in order to obtain its best estimate of where the economy is heading. 6 and, indeed, as indicated by the sep, see the board of governors of the federal reserve system ( 2018 ), monetary policy report ( washington : board of governors, july ), pp. 37 - 41, https : / / www. federalreserve. gov / monetarypolicy / files / 20180713 _ mprfullreport. pdf, or the web