The Federal Reserve increased its benchmark interest rate on Wednesday for the first time since 2023, moving the key rate to roughly 3.9%. The quarter‑point hike is intended to curb stubborn inflation and signals that a second increase to 4.1% could follow later this year.
Mortgage rates climb
Higher rates are already being felt by homebuyers. Freddie Mac reported the weekly average on a 30‑year fixed‑rate mortgage rose to 6.95% from 6.76% the previous week, the highest level since January 2025. One year ago the average was 6.26%.
Fifteen‑year fixed‑rate mortgages also rose, reaching 6.26% from 6.09% last week, up from 5.41% a year earlier.
Consumer spending and retail sales
Despite higher borrowing costs, consumer spending in August outpaced expectations. Retail sales grew 1.2% month‑over‑month, beating the 0.7% gain economists had forecast. Excluding gasoline sales, retail sales rose 1.1%.
Clothing and accessories stores saw a 0.7% increase, furniture and home‑furnishings stores rose 0.9%, and online retailers posted a 2.6% gain.
Labor market remains tight
Jobless claims fell sharply, with the Labor Department reporting 196,000 new filings—the fewest since mid‑July and down from 206,000 the week before. The four‑week average slipped to 203,250, below the 207,500 economists had projected.
Claims have stayed within a historically low range of 200,000 to 230,000 over the past year, indicating continued job security for many Americans.
Markets and energy
Wall Street closed the week with mixed results: the S&P 500 was essentially flat, the Dow Jones Industrial Average slipped, and the Nasdaq struggled to stay positive.
Brent crude oil prices hovered near $110 per barrel, up from just over $70 in July, though the price fluctuated throughout the week.
What this means for voters
Affordability concerns are becoming a central theme in the upcoming midterm elections, just seven weeks away. Rising costs for groceries, gas, and housing are shaping household decisions and could influence voter sentiment as the nation heads toward the polls.
Original reporting: Alexandria, VA News – WTOP News — read the source article.
