Higher rates both a sign of US economic might and risk to it

Higher rates: Both a sign of US economic strength and potential risk to it

APTOPIX Financial Markets Wall Street

Trader Peter Tuchman works on the floor of the New York Stock Exchange, Thursday, Oct. 11, 2018. The market's recent decline was set off by a sharp drop in bond prices and a corresponding increase in yields last week and early this week. (AP Photo/Richard Drew)


AP Economics Writer

Thursday, October 11, 2018

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.