However, we know that the neutral rate must have been well below its historical norm in recent years, because with the actual real interest having been as low as it has been lately, the economy would have otherwise expanded much more than has been the case.
In recent years, the neutral rate has likely been held down below normal levels because of the factors I discussed earlier, including persistently weak growth abroad, the high exchange value of the dollar, low rates of household formation, and weak productivity growth.