Eric Basmajian: Post-2008 negative real rates may signal new economic norm

Eric Basmajian: Post-2008 negative real rates may signal new economic norm
Negative real rates may become norm

Eric Basmajian questions whether the era of negative real interest rates following 2008 was an exception or a sign of a lasting change. He points out that while the current economic expansion has seen the real Federal funds rate rise to 2.4 percent, the average during the expansion remains at negative 0.8 percent.

Basmajian suggests that if the expansion concludes with a negative real rate again, the post-2008 pattern could represent a new long-term trend instead of an anomaly.

Basmajian has previously noted that debt-to-GDP has remained close to 360% for a decade, with a shift toward government debt and away from private debt (link). He has also highlighted that one-third of personal income comes from government transfers and assets (link). These observations provide further context for his views on real interest rate trends.

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