Rising energy and borrowing costs strain US economy ahead of midterm elections
Ahead of the upcoming US midterm elections, surging fuel prices, mortgage rates, and public debt are straining household budgets.
With 49 days left until the critical midterm elections on November 3, sharp increases in energy prices, housing finance, and market interest rates are putting pressure on the economy, while total public debt has exceeded $40 trillion for the first time.
Rise in Energy Costs Continues
Tensions in the Middle East and fluctuations in oil prices continue to drive up energy costs in the US.
According to American Automobile Association data, the price per gallon of gasoline rose to $4.32, while diesel saw $6.23 and exceeded $8 in California.
Inflation Above Fed Target
In August, the Consumer Price Index increased by 3.4 percent annually, while core inflation also came in above expectations.
A strong labor market and inflation above the target have reinforced expectations in the markets that the Fed will raise interest rates.
Interest Rate Pressure in the Housing Sector
According to Mortgage Bankers Association data, 30-year fixed mortgage interest rates reached 6.85 percent, their highest level since June 2025.
High financing costs are straining first-time homebuyers, while existing homeowners are avoiding moving in order not to lose their low-interest loans.
High Interest Rates in the Bond Market
The US 10-year Treasury bond yield rose to 5.03 percent, testing its highest rate since July 2007.
The Treasury Department's increase in the limits of long-term bond buyback operations to support liquidity was not enough to stop the rise in interest rates.
Public Debt Exceeds $40 Trillion
Total US public debt surpassed the $40 trillion threshold for the first time in history as of August 18.
Due to high interest rates, the net interest expense paid by the Treasury exceeded $1 trillion in the first 11 months of the 2026 fiscal year.
Election Promises and Political Debates
While the economic picture forms the main axis of politics, Donald Trump promised that a payment of $5,000 would be made to every adult if Republicans win.
While this promise has been criticized by liberal circles on the grounds that it would increase the budget deficit, it is evaluated differently in conservative circles.