America's economy is undergoing a rapid and dramatic transformation, a “once-a-century reset” where higher interest rates and artificial intelligence are destroying old fortunes and creating new ones at unprecedented speed.
October 4, 2025
Source:
MarketWatch
The End of an Era: Higher Rates Reshape Economy
The American economy is navigating a historic "reset," marking the end of a 15-year era of near-zero interest rates. This fundamental shift is creating a new financial reality for businesses and consumers alike.
A New Financial Landscape
The period of "easy money" is definitively over. The Federal Reserve has adjusted its long-term neutral interest rate (r-star) higher, to around 3%. This move establishes a new baseline for the cost of borrowing across the entire economy.
For the first time in years, debt term premiums are positive, fundamentally altering investment strategies, corporate valuations, and the flow of capital.
The Impact on Borrowing
This new environment of sustained higher interest rates directly impacts everyone:
Consumers face more expensive mortgages, auto loans, and credit card debt.
Businesses must contend with higher costs for financing operations, expansion, and new investments.
Investors are forced to re-evaluate risk and reward, moving away from speculative assets toward companies with strong fundamentals.
Keep up with the story. Subscribe to the PR+ free daily newsletter
Source:
The Wall Street Journal
Winners and Losers in the Economic Shift
This rapid economic transformation is creating a clear divide, sorting the economy into sectors that thrive and those that struggle under the new financial pressures.
Emerging Fortunes in Tech and Energy
Certain industries are positioned to excel in this new landscape. Key winners include:
Artificial Intelligence (AI): Business investment in AI remains exceptionally strong, driving productivity and innovation despite higher costs. According to McKinsey, AI adoption continues to accelerate business transformation.
Energy: Global demand and strategic importance are bolstering the energy sector.
Domestic Manufacturing: A focus on reshoring and building resilient supply chains is fueling growth in U.S.-based manufacturing.
Legacy Industries Under Pressure
Conversely, industries that were dependent on cheap financing are now facing a reckoning. Companies with high debt loads, unprofitable tech startups, and speculative real estate ventures are under severe pressure. Refinancing debt is now far more expensive, making it difficult for over-leveraged firms to survive.
Read More
Source:
The Wall Street Journal
Share this news:
