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Trib editorial: If you must worry, worry about interest rates, not Dow

| Thursday, Feb. 8, 2018, 4:33 p.m.
The closing numbers are displayed after the closing bell of the Dow Jones industrial average at the New York Stock Exchange on Feb. 5, 2018, in New York. ( BRYAN R. SMITH | AFP | Getty Images)
AFP/Getty Images
The closing numbers are displayed after the closing bell of the Dow Jones industrial average at the New York Stock Exchange on Feb. 5, 2018, in New York. ( BRYAN R. SMITH | AFP | Getty Images)

With the economy sound and strengthening, and long-term investing a proven strategy for retirement, holders of 401(k)-type accounts should sit tight and not fret too much about the stock market's wild swings lately. But if you are going to worry about something, worry about what experts say drove those Dow gyrations — interest rates.

A federal report showing January brought higher-than-expected job gains, the biggest year-over-year rise in average wages since 2009 and unemployment staying at a 17-year low prompted Wall Street worries about higher inflation and interest rates. Those worries fueled a one-day, 1,175-point Dow drop — a record for points but hardly for percentage.

However, if interest rates do rise, borrowing money will cost more.

So, expect your car-loan costs and credit-card bills to rise. And because higher borrowing costs also hit all levels of government — from the feds' deficit-fueled spending to your school district's next bond issue — expect your taxes to rise, too.

Inflation and interest rates are primary topics for Jerome Powell, new chairman of the Federal Reserve. Trying to bolster the historically slow recovery after 2008's Great Recession, the Fed, under predecessor Janet Yellen, kept interest rates artificially low for years.

Bad news — upward pressure on prices and interest rates — inevitably comes with good news on jobs, wages and unemployment. In that sense, it seems, America's finally getting back to business as usual — and its ups and downs.

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