SF Fed’s Williams: Time to Shift Conversation From Attaining Recovery to Sustaining Recovery

March 29, 2017

  • Says economy is as close to Fed’s dual mandate goals “as we’ve ever been.”
  • Tells economic forecasters that supply-side factors beyond the purview of monetary policy are holding back growth
  • Says Fed has “critically important” role to play in protecting hard-won gains from the recovery and preventing the economy from overheating

New York, New York – Today John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco told an audience of economic forecasters that with the economy as close as it’s ever been to attaining the Fed’s dual mandate goals, it is time to shift the conversation from how to attain an economic recovery to how to sustain the recovery. Speaking to the Forecasters Club, he said that monetary policy has a critically important role to play in making sure that growth remains sustainable – not too hot, not too cold. He laid out a strong case that a number of supply-side factors (beyond the purview of monetary policy) are the main impediments holding back future growth.

“The data have spoken and the message is clear: We’ve largely attained the hard-sought recovery we’ve been after for the past nine years,” said Williams. “In light of this achievement, we need to shift the conversation from ‘how do we achieve a sustained recovery?’ to ‘how do we sustain the recovery we’ve achieved?’

To keep the recovery sustainable and prevent the economy from overheating, Williams explained that a gradual pace of interest rate increases would bring monetary policy back to a normal stance, while at the same time, allowing the economy to grow at a healthy pace. “To promote sustainable growth, it is critically important that the Fed continue to make data-driven decisions to keep the economy from overheating and to protect the hard-won gains we’ve made,” he said.

On the topic of GDP growth, Williams noted that, while “the reduction in unemployment has been very impressive, one of the fascinating things that’s been going in the economy is that GDP growth has been almost equally un-impressive.” 

Citing slow labor force and productivity growth, he argued that “unshackling the economy from these supply-side restraints” is largely beyond the purview of monetary policy and instead up to things like federal fiscal policy, state and local legislative actions, philanthropy, business investment, and public-private partnerships.

At the same time, in highlighting the San Francisco Fed’s leading role in Community Development initiatives, he stressed that institutions like the Fed have “a role to play in moving the ball forward” when it comes to the nation’s future prosperity. 

Tomorrow, at 11:15am at the Schomburg Center for Research in Black Culture (515 Malcolm X Boulevard, New York, NY), Williams will participate in a launch and learning event for the Strong, Prosperous and Resilient Communities Challenge (SPARCC). Co-founded by the Federal Reserve Bank of San Francisco, SPARCC connects investors with community stakeholders with the goal of sparking investment in areas like infrastructure, transit, affordable housing, the built environment, and public health. 



The Federal Reserve Bank of San Francisco, with branch offices in Los Angeles, Seattle, Salt Lake City, and Portland, and a cash processing office in Phoenix, provides wholesale banking services to financial institutions throughout the nine western states. As the nation’s central bank, the Federal Reserve System formulates monetary policy, serves as a bank regulator, administers certain consumer protection laws, and is fiscal agent for the U.S. government. Follow us on Twitter at twitter.com/sffed.