whether the business owner gained or lost wealth. families with businesses primarily engaged in mining or construction – among small businesses in the survey, this was overwhelmingly construction - related businesses – were the most likely to see a substantial decline in net worth ( figure 11 ). in contrast, families with a wholesale or retail business were more likely to see a substantial gain. those involved in utilities, transportation, and services – in the survey, this was predominantly services – saw the largest gains and the largest losses, but losses exceeded gains for the group. only 82 percent of the consumers who reported owning a business in 2007 also reported owning a business in 2009. and some of those who remained business owners may have scaled back their operations while awaiting recovery. we do not have the detail necessary to assess the importance of reduced operations directly, but we have some suggestive bis central bankers ’ speeches evidence. for businesses that were in operation in both 2007 and 2009, we see decreased median and mean business incomes for owners who saw their wealth fall and the reverse for owners whose wealth rose. some of the decrease in activity may be driven by a decline in demand for services, but some may come from credit constraints. for a variety of reasons, we cannot look directly at changes in credit availability for business owners and their businesses, but we can look at two indicators for the owners who had a continuing business in 2009. some business owners use proceeds from personal loans for business purposes or use personal assets to secure business loans. in other cases, the business itself may apply on its own. if the business is a sole proprietorship, there is no legal distinction between business and personal borrowing, but business owners still may view their personal and business debt separately. the 2009 scf panel interview asked participants to report separately whether they had applied for personal and business loans during the two - year period. if they had, it asked whether they had been turned down for a loan. the survey also asked whether they had wanted to borrow for personal or business purposes but had been so convinced they would be turned down that they did not apply. the data show a substantial level of personal and business applications both for owners whose wealth rose and for those whose wealth fell over the period of the scf panel. the level of personal applications was slightly higher for those whose wealth increased over the period, and their applications were more likely to have been approved ( or they were less likely to have believed they would have been denied ) ( figure 12 ). the pattern of personal loan denial

keep real interest rates below r * will eventually face rising inflation and inflation expectations, while a central bank that seeks to keep real interest rates above r * will eventually face falling inflation and inflation expectations. 3 my own and others'research suggests that the failure of the fed to respect this principle contributed to the great inflation of the 1970s, while the incorporation of this principle into fed policy in the 1990s and 2000s contributed to the achievement of stable and low inflation during and since those years. 4 so, even though estimates of r * are imprecise, i do not believe they should be ignored. instead, when thinking about monetary policy, i believe it is best not to ignore entirely an admittedly imprecise estimate of r * today, but instead to update that estimate as new data on inflation, inflation expectations, employment, growth, and productivity arrive. moreover, because monetary policy operates with a lag, and with inflation presently close to the 2 percent goal, it will be especially important to monitor inflation expectations closely using both surveys and financial market data to best calibrate the pace and destination for policy normalization. it will also be important to monitor both model - based and financial - market based estimates of expected future inflation - indexed real interest rates ( for example, 5 - year real rates 5 years forward ) suitably adjusted for term premium and liquidity effects as one indicator of longer - run r *. before the financial crisis, these 5 - year real rates 5 years forward averaged around 2 percent after a term premium and liquidity adjustment. since 2015, they have averaged about 0. 50 percent but recently have approached 0. 75 percent, also after a term and liquidity premium adjustment. given that real interest rates and economic growth tend to move together over the longer run, one possible source of these upward revisions in forward real rates could be that financial market participants may have become more optimistic about the growth potential of our economy. evidence also suggests that the term premium that investors require to hold longermaturity bonds has risen as well. the way forward if the data come in as i expect, i believe that some further gradual adjustment in the federal funds rate will be appropriate. as i mentioned earlier, i believe monetary policy today remains accommodative, and that, with the economy now operating at or close to mandate - consistent levels for inflation and unemployment, the risks that monetary policy must balance are now more symmetric and less skewed to the downside. raising rates too quickly could un