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2011 Annual Report

FOUR FORCES THAT
SHAPED THE ECONOMY IN 2011

ADJUSTMENT
& ADAPTATION
ADJUSTMENT
& ADAPTATION
Balance sheet repair occurred in four primary areas. Households saved more and spent less. Large businesses strengthened their finances while small businesses continued to struggle. Financial institutions adjusted to intensified regulation. Governments grappled with fiscal imbalances.
THE LABOR MARKET
THE LABOR MARKET
Several dynamics in the labor market helped shape the 2011 economy. Although the labor market made gradual improvement, high unemployment remained a serious concern. In addition, unemployment, weak aggregate demand, and deleveraging were working together in a vicious cycle.
WIDESPREAD
UNCERTAINTY
WIDESPREAD
UNCERTAINTY
Uncertainty as a force influencing the global economy in 2011 emanated from several sources. How much uncertainty affected the economy was difficult to say, but it clearly shook the confidence of consumers and businesses and made them less likely to spend, invest and hire.
MONETARY
POLICY
MONETARY
POLICY
Monetary policy was an economic force designed to mitigate the negative influences on the economy. During the year, the Federal Reserve enacted monetary policy measures aimed at boosting economic activity, facilitating credit flows, and guarding against shocks to the nation's financial system.