In the fall of 2009, the global financial crisis had only just ended, and interest rates were a mere 0.1%. Peering ahead, economists assumed the recovery would resemble previous recoveries, though a tad slower, and thus rates would start rising the next year and plateau at 4.2% by 2015.
But by the fall of 2010, rates hadn’t budged. Like Charlie Brown taking another run at the football, economists gamely made the same forecast that year, and the year after that and the year after that. Rates remained stuck near zero until 2015, a stretch of free money unseen since the 1940s.
When rates started to rise, they didn’t come close to levels once considered normal, ending the decade between 1.5% and 1.75%. Private-sector economists now expect them to average 2.4% over the long term, according to Blue Chip Economic Indicators. Judging by the bond market, they might have guessed high again: Ten-year Treasury note yields are just 1.9% — roughly zero, adjusted for inflation.