Could long-term interest rates become higher than the growth rate? Perhaps in the United States

If long-term interest rates rise above the growth rate, it is a very significant event creating discontinuity: it gives rise to a risk of insolvency for borrowers, especially given the very high debt ratios at present. It is therefore crucial to look into the risk that long-term interest rates may exceed growth rates. In the United States, with a nominal potential growth of 3 . 6% and a 10-year interest rate of 2 . 8% currently , we can see that we are close to this reversal of the relative levels of long-term interest rates and average growth. In the euro zone, with a nominal potential growth rate of 2.5% and an average 10-year interest rate of 1.1%, and given the ECB’s caution in terms of hiking interest rates, we are far from see ing the interest rate reaching the level of growth.