US Economy Grapples with Affordability Concerns as Interest Rates Rise

The US economy is facing affordability concerns as inflation remains high and interest rates rise. The Federal Reserve raised its benchmark interest rate to 3.9% for the first time in three years, a quarter-point increase that could lead to higher borrowing costs for mortgages, auto loans, and credit cards.

This move comes amid rising costs for groceries, gas, and housing, which are already straining American households. The benchmark 30-year fixed mortgage rate has reached nearly 7%, its highest level in over 19 months, and is expected to continue climbing.

Retail sales did see a boost in August, increasing by 1.2% after a revised 0.5% decline in July. However, this growth was largely driven by consumers stepping up their spending on non-essential items.