July 6, 2014

IN A WORLD OF DECLINING DEMOGRAPHICS ELSEWHERE, FALLING LABOR COSTS...

Why interest rates may stay very low for a lot longer (TOM PETRUNO, 7/05/14)

Now, with the U.S. economy showing resilience after a winter slump, the focus has again shifted to the question of when interest rates could begin to return to "normal" levels.

Yet many economists and investment pros believe that neither short-term nor long-term rates will go significantly higher, and stay there, in the next few years. More likely, they say, are modest increases that might even be quickly reversed.

The implications of another extended period of depressed rates would be huge for Americans' investing and saving strategies. It could continue to support stocks' bull market and home prices, for example.

But pension funds hoping for higher bond yields to fund promised retiree benefits would be stymied. And there would be more frustration for savers who now have nearly $10 trillion sitting in short-term bank accounts and money market mutual funds, earning almost nothing.

...freer trade and greater domestic savings, there can be no upward pressure on rates. Posted by at July 6, 2014 9:51 AM
  
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