Indicators related to energy, housing and public finances ahead of the approaching midterm elections in the United States point to mounting cost pressures on households.
Rising gasoline and diesel prices ahead of the November 3 elections were accompanied by higher long-term borrowing costs and bond yields. Despite measures aimed at limiting inflation, these issues remained at the center of the economic debate.
Fuel costs pass through to consumer prices
According to data from the American Automobile Association, the average price of gasoline in the United States rose to $4.32 per gallon on September 14. The price was $3.18 during the same period last year, representing a 35.9 percent annual increase.
The average price of diesel, used in transportation, logistics and agriculture, also reached a record $6.23 per gallon on September 14. Diesel, which cost $3.69 during the same period last year, rose 68.7 percent. The average diesel price in California surpassed $8.
Diesel prices, which were below $4 at the beginning of the Russia-Ukraine war, rising above $6 nationwide, while gasoline prices remained above $4, increased concerns over energy costs. Tensions in the Middle East and fluctuations in oil prices also contributed to this picture.
Rising fuel prices drove up transportation expenses and costs at various stages of the supply chain, passing through to consumer prices.
Inflation strengthens expectations of a rate hike
The Consumer Price Index in the United States rose 0.4 percent month on month and 3.4 percent year on year in August. Core inflation, which excludes energy and food prices, increased 0.3 percent month on month, exceeding expectations.
Gasoline prices rose 3.9 percent month on month and 27.4 percent year on year in August. This increase accounted for more than one-third of the monthly rise in inflation. The energy index also rose 2.1 percent month on month and 16.3 percent year on year during the same month.
The Producer Price Index rose 0.4 percent month on month and 5.4 percent year on year in August. A strong labor market and inflation above the target supported expectations of a rate hike.
According to CME Group data, markets priced in a greater than 90 percent probability that the Federal Reserve would raise its policy rate by 25 basis points at its September 15-16 meeting.
Mortgage rates approach 7 percent
Data from the Mortgage Bankers Association showed that the average rate on 30-year mortgages in the United States rose to 6.85 percent in the week ending September 4. This was the highest level recorded since June 2025. Mortgage refinancing applications fell to their lowest level since May 2025.
Joel Kan, a vice president at the Mortgage Bankers Association, said concerns among investors over inflation and the federal budget deficit had pushed mortgage rates higher. Rates approaching 7 percent are making it harder for young families seeking to buy their first home and middle-income households to access the housing market.
Existing homeowners seeking to retain their older, lower-rate mortgages are avoiding moving and putting their homes up for sale. High financing costs are shifting demand toward rental housing, while this situation in the for-sale and rental housing markets is increasing households' housing expenses.
Bond yields and public debt rise
The yield on the U.S. 10-year Treasury note rose to 5.03 percent, its highest level since July 2007. Intense pressure on interest rates and a wave of selling accelerated the rise in long-term bond yields.
The U.S. Treasury Department announced that it would increase the size of its buyback operations involving long-term bonds to support market liquidity. The amount per operation was planned to rise from a maximum of $2 billion to at least $4 billion, but the move did not halt the rise in bond yields.
Total U.S. public debt exceeded $40 trillion for the first time as of August 18. More than $32.265 trillion of the debt consisted of debt held by the public, while $7.781 trillion consisted of intragovernmental holdings.
U.S. public debt, which stood at $36.2 trillion in January 2025, when U.S. President Donald Trump began his second term, increased by approximately $4 trillion. Higher interest rates raised the Treasury's interest expenses on bonds, while tax cuts put pressure on public revenues. Spending on defense and social programs also contributed to the continued budget deficits.
According to the Treasury Department's budget data, net interest costs on public debt exceeded $1 trillion during the 11 months of fiscal year 2026, which began in October 2025.
Trump promises $5,000 for adults
As the election calendar entered its final 50 days, the economic outlook moved to the forefront of political debate. The opposition attributed the current situation to economic policies, while the administration emphasized the impact of global conditions and external shocks.
U.S. President Donald Trump said that every adult would receive a $5,000 payment if Republicans won the House of Representatives and Senate elections.
The promise was criticized by liberal media outlets and viewed favorably by conservative media outlets. Media organizations critical of Trump's policies argued that the measure could create an additional deficit of more than $1.2 trillion in the budget and harm the economy.
Some analysts said the promise could amount to an election bribe and was legally controversial.
