Q: Do continuing low interest rates imperil the economy and individuals’ finances?

Kelly Cunningham, National University System

Kelly Cunningham

Answer: YES

Artificially low interest rates send false signals to the economy, preventing savings and investment, and encouraging reckless borrowing and needless spending. This prevents business and capital investment needed for real and lasting economic growth. As a result, historically low growth in productivity and business investment occurred over the past eight years. Rising asset prices are the only support in an otherwise anemic economy. The cycle of debt needs to stop for actual economic recovery to occur.


Do continuing low interest rates imperil the economy and individuals’ finances?

Phil Blair, Manpower

Phil Blair

Answer: NO

Unlike the price of a barrel of oil dropping dramatically and hurting the mega, medium and small companies in the oil producing businesses, it is hard to understand how paying higher interest rates on everything would help our economy. Like the price of gas dropping dramatically helps save middle and lower income drivers lots of cash, I see very low internet rates as helping many more people keep their cash than it hurts.


David Ely, San Diego State University

David Ely, San Diego State University, associate dean and professor of finance (EconoMeter panelist from 11/22/2015) ( / San Diego State University)

Answer: YES

Household savers are earning very little on bank and money market fund accounts and must choose between saving more of their income or shifting into riskier investments. Financial institutions are impacted too. Insurance companies and pension funds suffer from lower earnings on their assets; banks’ spreads between what they earn on loans and pay on deposits has narrowed. Low rates at the start of the next economic downturn will limit the Federal Reserve’s ability to respond.

Gina Champion-Cain, American National Investments

Gina Champion-Cain


Answer: NO

A low interest rate environment is an economic net positive . This is primarily due to the fact that cheap money is deployed at higher volume than expensive money.Post-great recession uncertainty has held investment back for an inordinate period. But the power of low-interest borrowing is now overcoming the continued uncertainty.

I look for accelerated capital deployment, always a positive for individuals and the economy.

Alan Gin, University of San Diego

Alan Gin


Answer: NO

Low interest rates will give a net boost to the economy, but some groups will benefit and others will be hurt. Borrowers will benefit from the lower interest costs. For consumers, that will help in terms of big ticket purchases, such as housing, automobiles, etc. For businesses, that will help when borrowing for capital investments or to finance operations. Savers are the losers. They get very little return on their savings, which has pushed money into and boosted the stock market.

Jamie Moraga, intelliSolutions

Jamie Moraga

Answer: YES


The flip side to a prolonged period of low interest rates is the poor return on savings and CDs – especially to those who are retired, want to retire, or live on a fixed income. Low interest rates can be used to stimulate growth – encourage businesses to borrow and consumers to spend. The Fed has alluded that they may raise interest rates before the end of the year. However, we have a volatile election, slow global economic growth, countries that have deployed negative interest rates, and ongoing global terrorism – all which factors into the stability and growth of the U.S. and global economies.

James Hamilton, University of California San Diego

James Hamilton

Answer: NO

While low interest rates mean less income for retirees and pension funds, the top priority is to get the economy growing again. The best way the Federal Reserve can do this is to try to stimulate housing and other investment spending by keeping interest rates low a little longer. Once investment is growing again, it will start to lift everyone’s income. If the Fed raises rates too early, it could keep us stuck even longer in a bad place.


Gail Naughton, Histogen

Gail Naughton

Answer: YES

Although low interest rates have been positive for the automakers and mortgage lenders, periods with the lowest real rates on Treasury bills have historically been linked to low future returns on equities, poor economic growth, and increased uncertainties. Large U.S. banks and other financial firms suffer the most since low rates affect pension funds, insurance, and the ability for banks to benefit from the spread between interest rates from loans and payments made to customers.

Gary London, The London Group Realty Advisors

Gary London


Answer: YES

Like most Americans, I am, decidedly schizophrenic about interest rates. On the one hand, I enjoy those low mortgage rates and the added disposable income provided. But I bemoan low returns in my pension and savings accounts. On a macro level, low interest rates reflect weakness in the economy, and narrow the parameters for the Federal Reserve to move the discount rate to infuse or defuse economic growth. My prediction is that these relatively low rate ranges will continue to be with us for a long period.

Austin Neudecker, Rev

Austin Neudecker

Answer: NO


Low interest rates affect various consumers differently. Those of us in significant debt, or planning to borrow money, welcome sustained, low interest rates. Low interest can lead to growth, and possibly inflation, causing average prices to go up. Those of us that are mainly saving money or lending are hurt by low interest and high inflation. The overall economy is best served by a balanced strategy that monitors and attempts to counter the market whims.

Norm Miller, University of San Diego

Norm Miller

Answer: YES

Two huge negatives result:


(1) low yields on bonds and all conservative investments hit retired seniors hard and (2) low interest rates, below long-term equilibrium, result in artificially high prices for real estate. Some will view this second point as a positive and it is for sellers, but when rates go up significantly prices will fall. Fortunately for homeowners, higher rates are not yet on the horizon but these low rates are unfortunate for retired households.

Bob Rauch, R.A. Rauch and Associates

Robert Rauch

Answer: NO

It is likely that continued low interest rates will keep the economy moving as investors can lock in low rates to help build their investment portfolios. Eventually, we run two risks: first, baby boomers, as they have saved for retirement, will begin to feel the pinch no-growth savings accounts and second, deflation, Japan style, could impact us by leaving us with virtually no economic growth. For now, low interest rates are holding our economy together.


Lynn Reaser, Point Loma Nazarene University

Lynn Reaser

Answer: YES

Low interest rates are harming individuals in four ways. Older Americans see little interest income, while younger Americans find it difficult to build savings. Both groups may assume high risk in seeking better yields. Households are accumulating debt, encouraged by banks looking to offset squeezed margins with more loans. Beyond households, government and private pensions face a widening in unfunded liabilities. For the general economy, low interest rates could feed another asset price bubble in stocks and bonds.

John Sarkisian, SKLZ

John Sarkisian, Pro Performance Sports


Answer: NO

Anemic economic growth continues to defer any rate increases in the U.S.and around the world. Low interest rates while continuing to support the economy may be distorting certain asset classes. Is the stock market overvalued due to a lack of returns in bonds? Are low interest rates inflating real estate prices? The answer is probably yes. Yet low rates have been necessary to accommodate government spending, spur weak economic growth and support individuals finances. Raising rates may imperil economic growth and that is the risk the Fed is weighing.

Dan Seiver, Reilly Financial Advisors

Dan Seiver

Answer: NO


They are more a symptom than a cause. Economic growth since 2009 has been very slow, and has yet to pick up to rates considered normal in the past. Inflation has also remained below the Fed’s target. Why raise rates now and possibly choke off the slow recovery? The real losers from continued low rates are pension funds which assume that future returns will average 7-8 percent. Hard to achieve in a low growth, low rate environment.

Chris Van Gorder, Scripps Health

Chris Van Gorder

Answer: NO

Low interest rates are generally good for the economy. They stimulate economic activity, with businesses buying more capital goods and consumers increasing their spending on automobiles, homes and furnishings. There is a possibility of rising inflation if the Fed keeps interest rates too low. Low rates may encourage investors to take imprudent risks to compensate for the lower yields. And for those on fixed incomes depending on simple savings, low interest rates can be an economic issue.