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Negative interest rates could happen in US

Results would be mixed-bag for investors
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Posted at 8:50 AM, Sep 09, 2019
and last updated 2019-09-09 11:50:32-04

SAN DIEGO (KGTV) - Investors are watching carefully to see if interest rates keep dropping, or if they may eventually dip below zero in the United States.

Recently, former Chairman of the Federal Reserve Alan Greenspan said it's a possibility, as rates have remained historically low for the past few years.

In San Diego, the results of a negative interest rate would be good news for some and bad news for others.

"Low rates are a double-edged sword," says Dennis Brewster of SagePoint Financial. "If you're a borrower, if you're looking to buy a house today, mortgage rates have never been lower. But if you're a saver and you have money in the bank or in a CD, your rates are pretty poor."

Brewster says the interest rate tends to drop when growth in the US is slow, both for the population and the Gross Domestic Product. He says that's what's happening now, as the baby boomer generation is getting older and later generations have fewer children.

Brewster says slower population growth leads to slower economic growth because there are fewer people in the workforce, which means company production is down, and so is spending. He says that is happening despite record low unemployment.

As for negative interest, Brewster says the average San Diego shouldn't worry since it's unlikely to happen.

"I wouldn't change your long term plans," he says. "The economy can move forward through high or low rates."