By Josh Boak

The Associated Press

WASHINGTON, D.C. — 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 in its 10th year — the second-longest such streak on record.

Fed officials last month raised its key short-term rate for the third time this year, and a fourth hike is likely before year’s end.

Jerome Powell, the Fed chairman, is trying to keep inflation in check and unwind the central bank’s programs that were launched to rescue the economy after the 2008 financial crisis.

Economists generally view the recent rate increases as a natural response to improved growth. Against that backdrop, a rise in borrowing rates may not be cause for alarm.

“Higher interest rates need not be a threat — they can and should be taken as a sign of economic strength,” said Carl Tannenbaum, chief economist for Northern Trust.

With growth accelerating, demand for credit typically also increases. That additional demand for debt generally causes borrowing rates to climb.

Some of that greater demand has come from the federal government as the budget deficit has jumped $232 billion so far this fiscal year, largely to finance the president’s tax cuts.

Faster growth can produce some pain for the stock market and homebuyers as rates adjust upward. Should rates surge too much, they could trigger a recession as companies and consumers struggle to repay debt. For now, most economists foresee no downturn.

The average 30-year fixed rate mortgage jumped this week to 4.9 percent, the highest level in seven years, according to mortgage buyer Freddie Mac. Higher rates increase the costs for would-be homebuyers and could stymie home sales, which could also depress consumer spending.