By all appearances, the 2001 recession, which began in March of last year, ended last November, at which point the U.S. economy entered into an expansion. In this presentation, I hope to provide you with a snapshot of where that expansion currently stands and where the economy may be headed. ; I'll begin by discussing the weakness of the expansion. Is this weakness surprising? I'll try to show that, in terms of output growth, the weakness is largely in line with the mildness of the 2001 downturn, but that in terms of employment growth, the recovery has been sluggish, suggesting a repeat of 1991?s "jobless recovery." ; I'll then examine what looks to be a cooling in the pace of recovery on the economy's production side, since July. This slowing has raised fears of a possible "double dip" recession. Is the economy tipping back into recession? While the late-summer developments are clearly troubling, we'll see that the data don’t yet support an imminent second dip. ; With production cooling, much will depend on the continued health of demand, and it is here that most of the positive news has been of late. Investment is showing some flickering signs of life, and consumers continue to spend, albeit at a moderate pace. Looking forward, we'll want to ask whether these sources of demand have sufficient momentum to pull the economy along. ; I'll conclude with inflation, where the marked acceleration in consumer price inflation which began in 1999 and continued through last spring, has been replaced, suddenly, with a marked deceleration, to the point where concerns about deflation have begun to be voiced from some quarters. We'll want to ask whether those concerns are warranted.
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