empirical assessment, see johnson, pence, and vine ( 2014 ). bis central bankers ’ speeches run objective of 2 percent. overall consumer price inflation – as measured by the change in the price index for personal consumption expenditures – was only 1 / 4 percent over the 12 months ending in october. however, this number largely reflects the sharp fall in crude oil prices since the summer of 2014 that, in turn, has pushed down retail prices for gasoline and other consumer energy products. because food and energy prices are volatile, it is often helpful to look at inflation excluding those two categories – known as core inflation – which is typically a better indicator of future overall inflation than recent readings of headline inflation. but core inflation – which ran at 1 – 1 / 4 percent over the 12 months ending in october – is also well below our 2 percent objective, partly reflecting the appreciation of the u. s. dollar. the stronger dollar has pushed down the prices of imported goods, placing temporary downward pressure on core inflation. 3 the plunge in crude oil prices may also have had some small indirect effects in holding down the prices of non - energy items in core inflation, as producers passed on to their customers some of the reductions in their energy - related costs. taking account of these effects, which may be holding down core inflation by around 1 / 4 to 1 / 2 percentage point, it appears that the underlying rate of inflation in the united states has been running in the vicinity of 1 – 1 / 2 to 1 – 3 / 4 percent. let me now turn to where i see the economy is likely headed over the next several years. to summarize, i anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our 2 percent objective. i expect that the fundamental factors supporting domestic spending that i have enumerated today will continue to do so, while the drag from some of the factors that have been weighing on economic growth should begin to lessen next year. although the economic outlook, as always, is uncertain, i currently see the risks to the outlook for economic activity and the labor market as very close to balanced. turning to the factors that have been holding down growth, as i already noted, the higher foreign exchange value of the dollar, as well as weak growth in some foreign economies, has restrained the demand for u. s. exports over the past year. in

be induced to seek work if the likelihood of finding a job rose or if the expected pay was higher. examples here include people who had become too discouraged to search for work when the prospects for employment were poor and some who retired when their previous jobs ended. in october, almost 2 million individuals classified as outside the labor force because they had not searched for work in the previous four weeks reported that they wanted and were available for work. this is a considerable number of people, and some of them undoubtedly would be drawn back into the workforce as the labor market continued to strengthen. likewise, some of those who report they don ’ t want to work now could change their minds in a stronger job market. another margin of labor market slack not reflected in the unemployment rate consists of individuals who report that they are working part time but would prefer a full - time job and cannot find one – those classified as “ part time for economic reasons. ” the share of such see table 1 in the summary of economic projections, an addendum to the minutes of the september 2015 fomc meeting. see board of governors ( 2015b ). bis central bankers ’ speeches workers jumped from 3 percent of total employment prior to the great recession to around 6 – 1 / 2 percent by 2010. since then, however, the share of these part time workers has fallen considerably and now is less than 4 percent of those employed. while this decline represents considerable progress, particularly given secular trends that over time may have increased the prevalence of part - time employment, i think some room remains for the hours of these workers to increase as the labor market improves further. the pace of increases in labor compensation provides another possible indicator, albeit an imperfect one, of the degree of labor market slack. until recently labor compensation had grown only modestly, at average annual rates of around 2 to 2 – 1 / 2 percent. more recently, however, we have seen a welcome pickup in the growth rate of average hourly earnings for all employees and of compensation per hour in the business sector. while it is too soon to conclude whether these more rapid rates of increase will continue, a sustained pickup would likely signal a diminution of labor market slack. turning to overall economic activity, u. s. economic output – as measured by inflationadjusted gross domestic product ( gdp ), or real gdp – has increased at a moderate pace, on balance, during the expansion. over the first three quarters of this year, real gdp is currently estimated to have