Along with an improving job market and a booming industrial sector, Americans came face to face with a number of new economic realities last week that were less welcome, among them the $42 barrel of oil, the $3.75 gallon of milk, the 6.5 percent mortgage -- and a Dow Jones industrial average briefly dipping below 10,000.

The cyclical transition to higher growth, higher prices and higher interest rates is never without its dislocations, but this one is likely to be full of more surprises than usual, given many of the underlying imbalances in the global economy.

Hardest hit, in fact, have been bond markets in Russia, Brazil, Turkey and other developing countries that have been red hot over the past two years as investors seeking higher yields poured in billions of dollars. Now that rates are rising in the United States and Britain, and the outlines of a full-blown speculative bubble are becoming clear, investors with painful memories of other emerging-market debt crises have begun to rush toward the exit. Stock markets in those countries were also caught in the downdraft.

But it is oil prices that have caught everyone's attention, from the motorist cursing the $2.50 gallon of gasoline guzzled by her brand-new SUV to the airlines that can't get back to profitability despite traffic that has returned to pre-9/11 levels. A rising trade deficit and a noticeable step up in the inflation rate were also part of the week's news.

The problem may have begun with OPEC's miscalculation earlier in the year about the strength of the global economic recovery and its cut in production quotas. Even the announcement from Saudi Arabia's oil minister last week that it would press to open up the spigots could not calm markets. Traders were well aware that there isn't capacity to ship or refine much more crude, and that inventories of refined products that meet new environmental standards remain dangerously low for this time of year. Add to that increased fighting in Iraq and turmoil in the Middle East, which only raised fears that a terrorist attack in Saudi Arabia or elsewhere could disrupt short-term supplies.

How much of the oil price increase is the result of speculative bidding and how much is a longer-term mismatch between supply and demand is now the subject of intense speculation among traders and analysts. In truth, it is anyone's guess. Much may depend on China, and whether its sudden thirst for oil reflects a temporary overheating of its economy or a permanent shift from bicycles to BMWs and farms to factories.