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19 Got something to share with us? Send it to Editor@DSNews.com. Journal IS THE ECONOMY STUCK IN NEUTRAL? ere's a low demand for capital investment due to many factors, which has, more or less, neutralized some parts of the economy. In fact, the neutral rate of interest is at a historic low, and it doesn't look like it will increase any time soon, that's according to First American Chief Economist Odeta Kushi. Welcome to the lowest neutral rate of interest in years, a statement and status most might find confusing. But according to First American, this 60-year low may prove that the economy may be stuck in neutral for a while. What exactly is a neutral rate of interest? Kushi explains that when the economy is at full employment and enjoying stable inflation, it's the short-term interest rate that would be the standard. e Federal Reserve may then choose to cool the economy by setting benchmark federal funds rates above the neutral rate of interest or stimulate the economy by setting rates below it. Since the financial crisis of 2009, the neutral rate of interest has been below the federal funds rate. And currently, this phenomenon isn't exclusive to the United States. Other advanced economies like Canada and the United Kingdom are experiencing similar economic activity. is may be due in part to the world old-age dependency ratio, which measures how much of the population has aged out of the workforce. ese individuals reduce the output of the economy. With fewer workers to supply with capital investment, there's less demand for new investment, and this pushes the neutral rate of interest down. In addition, if this aging population has money saved for retirement, they've increased the supply of savings, which also drives down the neutral rate of interest. In 2019, the U.S. old-age dependency ratio reached 25%.