The U.S. economy is running hot and stuck on a hamster wheel as GDP growth must outpace borrowing costs—or else get sucked into a debt spiral 

High gas prices and low consumer sentiment over the cost of living have obscured how robust the U.S. economy has been lately.

Not only has the economy absorbed shocks from President Donald Trump’s tariffs and war on Iran, it has been running hot.

Federal Reserve policymakers recognized that the economy isn’t just resilient but thriving as they hiked interest rates earlier this month to rein in inflation.

At the same time, the prospect of a hot economy that adds more inflationary pressure has sent Treasury yields soaring, creating a heavier burden for servicing $40 trillion in U.S. debt.

That means the economy is stuck on a hamster wheel, scurrying to outrun borrowing costs and avoid a reduction in speed that allows debt to grow faster than the economy.

For now, GDP is staying ahead of interest rates. While growth adjusted for inflation has been around 2%, nominal growth has been well above 6%—still more than the 5.16% 10-year yield, even after it jumped more than a full percentage point since the Iran war began.

Growth in the third quarter could show even more acceleration, as a recent gauge of U.S. business activity for September hit a five-year high.

Of course, the AI boom has a lot to do with that. Capital expenditures from Alphabet, Amazon, Microsoft, Meta, Oracle, and SpaceX are projected to........

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