State of Business: Heightening Interest

One economic indicator close to the heart of every American—the cost of borrowing money—has not followed the usual recovery curve. Interest rates classically move up and down as the economy does; it costs more to borrow money when recovery gets going. But this year, interest rates have risen scarcely at all—despite the fact that the Federal Reserve industrial production index hit an alltime high of 112 in July. Says Vice President John J. Barry of Boston's National Shawmut Bank: "Right now there seems to be an equilibrium between supply and demand for...