From the Boardroom
This year’s report focuses on innovation and U.S. productivity.
This seems especially appropriate for a number of reasons. The remarkable
performance of U.S. productivity in recent years is proving to be an
enduring story—one that is important to all of us. For the Federal
Reserve, understanding the sources of the current productivity boom is
central to monetary policy because the potential growth of the economy,
something we look at in setting a course for policy, depends directly
on productivity growth.
The prevalence of high technology firms in the Twelfth District makes
the current episode of productivity growth especially relevant for our
region, given that the information technology (IT) producing sectors
account for a major part of the current surge. Because productivity is
so important, we have devoted a significant amount of effort at the Federal
Reserve Bank of San Francisco over the past several years to build our
expertise in the areas of innovation, technology, and productivity. This
led to the launch in 2003 of the Center for the Study of Innovation and
Productivity within our Economic Research department. Their efforts have
focused on IT as well as other innovations affecting U.S. productivity
such as the way businesses are organized and how they implement the use
of IT equipment in the workplace. The center also is looking at the relationship
of research and development to productivity in different industries and
how productivity gains are reflected in prices, wages, and profits.
The center’s research provides the foundation for our report’s
main essay, which examines in detail how innovation and productivity
are fundamental forces shaping the economy and our standard of living.
The essay also looks at the current boom in light of past historical
episodes. With the clothing manufacturing and agricultural industries
experiencing many of the productivity enhancements shaping businesses
today, the report showcases Karen Kane, Inc. and Stahlbush Island Farms,
two companies led by former and current members of our boards of directors.
The report also looks inside our own doors where new business processes
combined with technology and other workplace innovations are shaping
how we work at the Federal Reserve Bank of San Francisco.
The year 2003 continued to be one of major challenges for our organization
as we grappled with ongoing changes in the financial services industry.
Facing dramatic declines in check volumes in our District and across
the entire Federal Reserve System, we, like other Reserve Banks, focused
our attention on cost recovery, revenue generation, and operational improvements.
Our employees were asked to meet challenging cost recovery targets, unlike
any our District has experienced to date. Despite the difficult circumstances,
they met the challenge head on—embracing new approaches to work
and bringing forth ideas of their own to surpass our goals for the year.
We would like to thank them for their significant efforts.
We also would like to extend our thanks and appreciation to our Twelfth
District directors for their invaluable counsel during 2003. The directors’ independent
assessment of economic and financial conditions throughout our nine
western states is critical to the formulation of monetary policy. In
particular, we acknowledge the many contributions of Nelson C. Rising
(Chairman and Chief Executive Officer, Catellus Development Corporation,
San Francisco, California) who stepped down after serving this Reserve
Bank in various capacities for more than five years, the last two and
a half as Chairman of the Board.
In addition, we would like to express our sincere thanks and appreciation
to the other directors and advisory council members who concluded their
terms of service during 2003:
- on the Los Angeles Branch Board: Lonnie Kane (President, Karen Kane,
Inc., Los Angeles, California) who served as chairman of the Los
Angeles Branch Board
during two years of his term; Linda Griego (Managing Partner, Engine Co.
No. 28, Los Angeles, California)
- on the Portland Branch Board: Patrick Borunda (Principal, The Navigator
- on the Salt Lake City Branch Board: Peggy Stock (President Emeritus,
Westminster College, Salt Lake City, Utah)
- on the Seattle Branch Board: Betsy Lawer (Vice Chair and Chief Operating
First National Bank Alaska, Anchorage, Alaska)
- on the Twelfth District Advisory Council: Richard S. Walden (Chairman,
President and Chief Executive Officer, Farmers Investment Company,
|Robert T. Parry
||George M. Scalise