*Editor's note: This article was originally published on April 30 by Menzie Chinn here.*

One argument against the secular stagnation thesis is that the risk-adjusted real rate is not particularly low. I’m dubious.

In Figure 1, I depict the real ten-year Treasury yield, adjusted by survey-based inflation expectations (from the Cleveland Fed, Survey of Professional Forecasters), and the TIPS yield.

**Figure 1:** Ten-year constant maturity Treasury yield adjusted Cleveland Fed ten-year expected inflation and Kim-Wright term spread (dark blue), adjusted by Survey of Professional Forecasters median ten-year expected inflation and Kim-Wright term premium (teal +), and TIPS yield adjusted by Kim-Wright term premium (red). NBER-defined recession dates shaded gray. Source: Fed, Cleveland Fed, NBER and author’s calculations.

Notice that real risk-free rates *have* declined, particularly relative to the 1980s. However, it is true that the decline is less apparent than in the typical graph using unadjusted real rates. This is shown in Figure 2.

**Figure 2:** Ten-year constant maturity Treasury yield adjusted Cleveland Fed ten-year expected inflation and Kim-Wright term spread (dark blue), quadratic trend (gray), and ten-year constant maturity Treasury yield adjusted Cleveland Fed ten-year expected inflation (pink). NBER defined recession dates shaded gray. Source: Fed, Cleveland Fed, NBER and author’s calculations.

The adjusted real ten-year rate is trend-stationary (can reject a unit root null). I estimate a quadratic trend shown in Figure 2. The trend is downward-sloping, and statistically significantly so. In other words, risk-adjusted rates *are* lower.

It may be the case that the risk-adjusted real rate rises in the near future. I will merely note that yet another alternative measure of the (short) risk-free natural rate (Laubach-Williams 1-sided estimate) suggests that real rates are low...

**Figure 3:** Ten-year constant maturity Treasury yield adjusted Cleveland Fed ten-year expected inflation and Kim-Wright term spread (dark blue), and Laubach-Williams one-sided estimates of natural rate (teal). NBER-defined recession dates shaded gray. Source: Fed, Cleveland Fed, Atlanta Fed, NBER and author’s calculations.

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