Energy, housing and public debt strain the economy as US midterms approach
Ahead of the upcoming US midterm elections, rising fuel prices, mortgage rates approaching 7 percent, and public debt exceeding 40 trillion dollars are putting pressure on households and markets.
With the midterm elections in the US approaching on November 3, record increases in energy prices, housing finance, and public debt are making everyday life difficult for voters, placing the economy at the center of the political agenda.
Increase in Fuel and Energy Costs
Driven by tensions in the Middle East and volatility in the oil market, fuel prices across the US have reached historical peaks.
According to data from the American Automobile Association, the price of a gallon of gasoline rose to $4.32, while the average price of a gallon of diesel reached $6.23.
Inflation and the Fed's Interest Rate Policy
While the Consumer Price Index increased by 0.4 percent monthly and 3.4 percent annually in August, the rise in energy prices keeps the risk of inflation alive.
The strong labor market and inflation above the target have reinforced market expectations that the Fed will raise interest rates.
Pressure on the Housing and Mortgage Market
According to Mortgage Bankers Association data, 30-year fixed mortgage rates climbed to 6.85 percent, the highest level since June 2025.
High financing costs make it difficult for prospective homeowners to enter the market, redirecting demand toward rental housing and triggering rent increases.
Bond Yields and Borrowing Costs
The yield on the 10-year US Treasury note rose to 5.03 percent, testing the highest level recorded since July 2007.
Limit increases in the Treasury Department's bond buyback operations were not enough to halt the upward movement in long-term yields.
Record Levels in Public Debt
As of August 18, total US public debt exceeded the 40 trillion dollar threshold for the first time in history, creating risks for economic balances.
As a result of high interest costs, tax cuts, and ongoing budget expenditures, net interest expenses related to public debt have surpassed 1 trillion dollars.
Election Process and Political Debates
As the economic picture takes center stage in the election race, the opposition has attributed the situation to the policies of the current administration.
President Donald Trump's promise to make a $5,000 payment to every adult in the event of a potential Republican victory has sparked debate in political circles.