Higher rates both a sign of US economic might and risk to it
WASHINGTON (AP) — This week’s dizzying sell-offs in the financial markets have been a rude reminder that the U.S. economy is no longer relying on ultra-low interest rates to fuel growth.
Borrowing costs are rising for companies, homebuyers and the U.S. government — all of which could eventually dampen economic growth.
Yet the climb in interest rates also reflects an economy that’s still managing to accelerate on the energy of an expansion now in its 10th year — the second-longest such streak on record. The pace of growth has picked up this year in part because of President Donald Trump’s tax cuts, which have also increased the federal budget deficit and contributed to the higher rates now spreading through the economy.