After almost seven years of holding interest rates at effectively zero and simultaneously flooding the economy with money through a massive bond-purchasing program, the Federal Reserve last week finally raised its own base rate by a quarter percent.

While European central bankers continue to explore the “Through the Looking Glass” world of negative interest rates, the United States central bank has finally brought the world of effectively free money to an end. The question naturally arises, therefore: What will be the effect in Maine?

As with any complex system, there is no simple answer. Nor will there be any quick answer.

While the Fed has telegraphed its intentions for years, its own forecasts of economic recovery have been consistently wrong. Virtually every year for the past six or seven, employment growth has never reached the level that the Fed had projected. And, even more perplexing, the inflation-deflation question has remained stubbornly enigmatic.

The complex interaction of consumer spending, business investment, labor productivity, aging populations, increasing inequality, tax complexity, commodity prices, international trade and capital flows, and everyone’s expectations about how all these variables will change tomorrow have made forecasting the effects of rising interest rates the financial equivalent of fantasy football. Everybody has an opinion, some people are making a lot of money on their guesses about next week – but few, if any, really have a clue.

That said, two important points can be made about the effects of a rising interest rate environment on the state of Maine. The first regards our status as a state of borrowers and lenders. The second concerns our dependence on the overall rate of national economic growth.

Interest rates are the price of money. Just as rising gasoline prices have a disproportionate impact on those who have to drive a lot, so rising interest rates have a disproportionate impact on those who owe a lot. From this perspective, a rising interest rate environment doesn’t look good for Maine.

According to a 2013 analysis by the Urban Institute, average household debt in Maine amounted to $53,100 – 1 percent below the national average. But our average household income of $62,000 was 14 percent below the national average. Thus, on a debt-to-income basis, we are about 14 percent above the national average.

Even more striking is the non-mortgage debt, primarily credit card and student loan debt. Here, Maine’s average per household is $17,500. This total is 10 percent above the national average in absolute figures and 28 percent above the national average when adjusted for household income.

In a separate study by the Institute for College Access and Success, Maine college graduates in 2014 had an average student loan debt of $30,900. This figure had increased by nearly 60 percent from the 2004 total and stood 15 percent above the 50-state average.

In short, from a debtor perspective, Maine doesn’t fare very well. As rising interest rates gradually work their way through the Rube Goldberg-like complexities of the financial system, Maine borrowers will see a rising share of their income going to service these debts.

How about on the lending side? Can Maine’s savers look forward to a better return on their money?

In 2014, Mainers did receive just over $9.3 billion in interest, dividend and rent payments. This amounted to just over 17 percent of total state personal income, so yes, some Mainers will undoubtedly benefit from rising interest rates.

However, Maine’s capital or saving share of total income is smaller than the national level – 18.5 percent – and is far less than the nearly 23 percent of our income ($12.4 billion) coming from government transfer payments, primarily Social Security, Medicare and Medicaid.

Thus, in the end, the most important result of the Fed’s decision to end the zero interest rate environment is not who wins and who loses – Maine will have some on both sides of that divide – but rather how the policy succeeds (or doesn’t) in moving the economy back to steady, broad employment growth. Only that outcome will truly benefit the people of Maine in a fundamental way.

Charles Lawton is chief economist for Planning Decisions, Inc. He can be contacted at:

[email protected]