approach to monetary policy. in january 2012, the committee issued its first statement on longer - run goals and monetary policy strategy, which we often refer to as the consensus statement. a central part of this statement was the articulation of a longer - run inflation goal of 2 percent. 7 because the structure of the labor market is strongly influenced by nonmonetary factors that can change over time, the committee did not set a numerical objective for maximum employment. however, the statement affirmed the committee ’ s commitment to fulfilling both of its congressionally mandated goals. the 2012 statement was a significant milestone, reflecting lessons learned from fighting high inflation as well as from experience around the world with flexible inflation targeting. the statement largely articulated the policy framework the committee had been following for some time. 8 motivation for the review the completion of the original consensus statement in january 2012 occurred early on in the recovery from the global financial crisis, when notions of what the “ new normal ” might bring were quite uncertain. since then, our understanding of the economy for the formalization and development of the concept of flexible inflation targeting, see svensson and, more recently, svensson ( 2020 ). as measured by the annual change in the price index for personal consumption expenditures. see board of governors ( 2012 ), p. 43. - 4has evolved in ways that are central to monetary policy. of course, the conduct of monetary policy has also evolved. a key purpose of our review has been to take stock of the lessons learned over this period and identify any further changes in our monetary policy framework that could enhance our ability to achieve our maximum - employment and price - stability objectives in the years ahead. 9 our evolving understanding of four key economic developments motivated our review. first, assessments of the potential, or longer - run, growth rate of the economy have declined. for example, since january 2012, the median estimate of potential growth from fomc participants has fallen from 2. 5 percent to 1. 8 percent ( see figure 1 ). some slowing in growth relative to earlier decades was to be expected, reflecting slowing population growth and the aging of the population. more troubling has been the decline in productivity growth, which is the primary driver of improving living standards over time. 10 second, the general level of interest rates has fallen both here in the united states and around the world. estimates of the neutral federal funds rate, which is the rate consistent with the economy operating at full strength and with stable inflation, have

lives even in very difficult circumstances. 3 this line of research has generated alternative measures of well - being that are frequently survey - based and incorporate elements such as psychological wellness, the level of education, physical health and safety, community vitality and the strength of family and social ties, and time spent in leisure activities. these measures have begun to inform official statistics and have started to be discussed in policy debates. an interesting and unique case is the kingdom of bhutan, which abandoned tracking gross national product in 1972 in favor of its gross national happiness index based on a survey that incorporates these types of indicators. taking the measurement of well - being in a cross - country framework, the organisation for economic co - operation and development ( oecd ), as part of its oecd better life initiative, has created a “ better life index ” that allows a side - by - side comparison of countries according to various quality - of - life indicators that could, at least in principle, be followed over time. 4 other somewhat - more - conventional economic indicators that bear on quality of life, and that accordingly might be developed and followed in more detail, include changes in the distribution of income, wealth, or consumption ; the degree of upward mobility in material measures of well - being ; indications of job security and confidence about future employment prospects ; and households ’ liquidity buffers or other measures of their ability to absorb financial shocks. all of these indicators could be useful in measuring economic progress or setbacks as well as in explaining economic decisionmaking or projecting future economic outcomes. see ben s. bernanke ( 2010 ), “ the economics of happiness, ” speech delivered at the university of south carolina commencement ceremony, columbia, s. c., may 8, www. federalreserve. gov / newsevents / speech / bernanke20100508a. htm. canonical models of economic decisionmaking presume individual maximization of “ utility, ” or well - being. they tend to focus on the consumption of goods or services and assume that more consumption is preferred to less. for example, see andrew mas - colell, michael d. whinston, and jerry r green ( 1995 ), microeconomic theory ( new york : oxford university press ). for examples drawn from organisation for economic co - operation and development countries from the mid1970s to the mid - 1990s, see rafael di tella and robert macculloch ( 2008 ), “ gross national happiness