US Economy Shifts into Higher Gear with Sticky Inflation and Fast Growth

The Federal Reserve raised its benchmark interest rate to 3.9% on Wednesday, but the move reflects a broader shift in the economy rather than a direct response to monetary policy.

Economists say that the US is entering a new era of sticky inflation and faster growth, where consumer and business spending are colliding with supply shocks and bottlenecks.

The average 30-year mortgage rate has reached 6.95%, its highest level in over a year and a half, as higher oil and gas prices due to the Iran war and an insufficient supply of computer chips and workers have hindered the AI buildout.

This shift is reminiscent of the pre-2008 economy, where consumer and business demand was weak, but now it's healthy spending by wealthier consumers that's driving growth.