Rising oil prices and rates add pressure to U.S. economy

Economists are warning that higher oil prices, persistent inflation and rising interest rates could test the U.S. Economy, which has continued expanding despite a slowing labor market and trade tensions. Brent crude reached $108.45 a barrel Monday, while U.S. Diesel prices hit a record $6.23 a gallon, according to AAA data.

August consumer prices rose 3.4% from a year earlier, above the Federal Reserve’s 2% target. Higher fuel costs are weighing most heavily on low- and middle-income households, while consumer sentiment fell to its second-lowest level on record this month, Oxford Economics said.

The Federal Reserve is expected to decide Wednesday whether to raise interest rates for the first time in more than three years. Higher rates could increase borrowing costs, worsen federal debt-service expenses and pressure stock valuations, while a market decline could reduce spending by wealthier households that have benefited from recent gains.

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