The U.S. and Regional Economies: A Monetary Policymaker's Perspective 1 Presentation to St. Mary’s College Annual Economic Conference St. Mary’s College, Moraga, California By Robert T. Parry, President and CEO of the Federal Reserve Bank of San Francisco For delivery April 14, 2004, 4:00 PM Pacific Daylight Time, 7:00 PM Eastern The U.S. and Regional Economies: A Monetary Policymaker’s Perspective I. Good afternoon. It’s a pleasure to be with you. A. In my remarks, I’m going to focus mainly on the national economy and its implications for monetary policy B. But I also want to say a few words about the economy here in the Bay Area. II. Let me start with the national picture. A. One of the hallmarks of the U.S. economy for quite some time now has been its remarkable productivity performance. 1. After more than two decades of growing at only about a one and a half percent rate, a. the pace of productivity growth (1) picked up around the end of 1995 (2) and averaged a rapid two and a half percent for the next five years. 2. After that, it really took off— a. —over the past three years, the rate has averaged an extraordinary four and a quarter percent! B. This performance has been a fundamental force in the economy’s growth. 1. It bodes well for a continuation of the current upswing in economic activity, a. because faster productivity growth creates business opportunities that stimulate spending. 2 2. It also bodes well for long-run increases in living standards in the U.S. C. Of course, the strong productivity performance is only one of the fundamental forces stimulating the economy’s growth at this point. Let me mention two other important fundamentals. 1. There’s the stimulus in the pipeline from fiscal policy. a. This includes the pickup in defense spending to support the action in Iraq b. and a series of sizable tax packages.