Every year, economists put pen to paper and make projections for the next 12 months. In addition to forecasts for real GDP growth, inflation and consumer spending, they look into their crystal ball to determine what the Federal Reserve will do with its benchmark rate and what long-term interest rates will do in response.

Fed funds rate projections are guided by the Fed itself, which four times a year releases what has become known as the "dot plot," a graph that reflects each committee member's expectation as a nameless dot. (No seniority. All dots are created equal.)

Long-term rates take their cue, in part, from the Fed because the long rate is the sum of the current and future expected short-term rates. But they maintain a certain degree of independence, incorporating as they do inflation expectations and a risk premium for buying a security that matures in 10 years or more. In other words, they offer their own assessment of the economy and, in some cases, Fed policy.

The Fed has been telegraphing mid-2015 for lift-off from what would be almost seven years of near-zero interest rates. Economists thought this would be the year when long-term interest rates would rise. (They thought the same about last year, too.) One year ago, economists surveyed by the Wall Street Journal said the 10-year Treasury note would end 2014 at 3.47 percent, on average. Instead, after a brief flirtation with 3 percent at the start of the year, the 10-year is trading at yields last seen in mid-2013 of about 2.25 percent.

That's not exactly an endorsement of the current expansion, which, at 64 months, is already old by historical standards. Long-term rates move pro-cyclically. If the U.S. economy were really gaining enough momentum to burst out its 2-something-percent growth path, one would expect long rates to rise. The Fed may be terrified of a premature rise in long rates, but it would be a positive sign, confirmation of stronger economic growth and credit demand.

Yes, the Fed's large-scale asset purchases removed long-term supply from the market in an attempt to depress mortgage rates and boost housing. But QE3 is winding down this month, unless the Fed has a change of heart. Besides, many analysts have noted the inverse correlation between Fed purchases and bond yields: Rates have tended to rise during periods of QE. That doesn't mean QE didn't work. Q stands for quantity, not price. QE probably saved the U.S. from becoming Europe.

Then there's the matter of the Fed's forward guidance. Policy makers have been doing their best to talk long rates down with regular assurances that an end to QE does not mean an end to zero rates. (If you missed the memo, any change in interest rates is data-dependent.) However, they still project a long-run neutral funds rate of 3.8 percent, based on the average forecast at the Sept. 16-17 meeting. If the Fed is correct in its assessment of the rate required to keep the economy growing at its potential in perpetuity, well, you do the math. A 10-year note yielding 2.25 percent would seem to offer little value.

The fed funds futures market has started to challenge the Fed's lift-off date as well. The June 2015 contract has erased any chance of a rate hike. The October 2015 futures reflect a slight possibility of a tightening, but January 2016 is the first contract to fully price in a move.

So what is Mr. Market telling us? The funds rate is not going to revert to a more normal level in this business cycle. The neutral rate has shifted down. The economy's growth potential has slowed, at least temporarily.

It used to be that strong economic data sent bond yields soaring. No more. Mr. Market refuses to endorse this expansion. The situation is reminiscent of the "productivity paradox" of the early 1990s. Computers were revolutionizing our lives, yet the effect of technological innovation failed to show up in official statistics. M.I.T. economist Robert Solow encapsulated the paradox at the time: "We see computers everywhere except in the productivity statistics."

Eventually technological innovation did show up in the statistics. The growth of non-farm business productivity reverted to a trend-like 2.5 percent in the mid-1990s following a 20-year slump. Since the end of the recession in June 2009, productivity has slowed to a paltry 1.3 percent pace. That bodes poorly for the future at a time when labor force growth is slowing and projected to slow further.

And it may explain the failure of predicted stronger economic growth to manifest itself in rising long-term rates.

Caroline Baum is a contributor to e21. You can follow her on Twitter here.