A new report from the McKinsey Global Institute examines the distributional effects of these ultra-low rates. It finds that there have been significant effects on different sectors in the economy in terms of income interest and expense. From 2007 to 2012, governments in the Eurozone, the United Kingdom, and the United States collectively benefited by $1.6 trillion, both through reduced debt-service costs and increased profits remitted by central banks (see the chart below). Nonfinancial corporations – large borrowers such as governments – benefited by $710 billion as the interest rates on debt fell. Although ultra-low interest rates boosted corporate profits in the United Kingdom and the United States by 5% in 2012, this has not translated into higher investment, possibly as a result of uncertainty about the strength of the economic recovery, as well as tighter lending standards. Meanwhile, households in these countries together lost $630 billion in net interest income, although the impact varies across groups. Younger households that are net borrowers have benefited, while older households with significant interest-bearing assets have lost income.
McKinsey estimates that households in the US have lost a cumulative $360 billion. Meanwhile, banks and businesses have done very well.