Since the Great Recession, productivity growth slowed around the world. We highlight that this pace slowed before the recession for the U.S. and Europe. This suggests potential importance of other factors, such as the relative slowing during and before the recession from previous fast-paced frontiers in IT. We provide VAR and panel-data evidence that changes in real interest rates influenced productivity dynamics in this period. In particular, the sharp decline in real interest rates in Italy and Spain seemed to trigger unfavorable reallocations large enough to reduce total factor productivity.