As midterm elections approach, voters face an economic landscape characterized by growing gross domestic product paired with stubbornly high inflation, sluggish job creation, and high mortgage rates, according to npr.org. As host Sacha Pfeiffer noted, many midterm races are extremely tight, and the economy has consistently ranked as a top issue driving voters to the polls.
The Bottom Line
- Inflation ticked up to 3.6% in September, outpacing wage growth and leaving nearly two-thirds of Americans disapproving of the president’s economic stewardship.
- Despite an annualized GDP growth rate of 3.4% in the late summer, driven heavily by artificial intelligence and data center investments, employers added a meager 29,000 jobs in September.
- The housing market remains constrained with 30-year fixed mortgage rates hovering around 7.25%, keeping potential buyers sidelined and dragging down the interest-sensitive sector.
Affordability Challenges Drive Voter Discontent
Affordability remains a central concern for voters heading to the polls, as the cost of living continues to rise faster than individual paychecks, npr.org reported. The Commerce Department reported that September inflation reached 3.6%, exceeding the rate recorded when President Trump returned to the White House. This persistent pressure has left nearly two-thirds of Americans dissatisfied with the president’s economic stewardship. NPR’s Scott Horsley noted that just as voters penalized Democrats for inflation during the 2024 elections, they may now direct their frustrations toward Republicans.
The GDP Growth and Job Market Disconnect
While the broader economy expanded at a 3.4% annualized rate in July, August, and September—up from 2.2% the previous quarter—that growth has failed to translate into widespread prosperity. Federal Reserve Chairman Kevin Warsh described the economy as strong and pointing in the right direction, stating in an archived recording, The economy is strong. The economy is pointing in the right direction.
However, much of that expansion stems from massive capital investments in artificial intelligence and physical data centers rather than broad-based labor demand. Employers added only 29,000 jobs in September, with October numbers expected in the coming week, and with unemployment sitting at 4.2%, low hiring rates and stagnant wages have left workers reluctant to leave their current positions.
| Economic Indicator | Recent Data Point | Context & Trend |
|---|---|---|
| September Inflation | 3.6% | Higher than the previous month and above levels seen when President Trump returned to the White House. |
| September Job Creation | 29,000 Jobs Added | Reflects a sluggish labor market despite a low 4.2% unemployment rate. |
| 30-Year Mortgage Rate | ~7.25% | Continues to suppress the housing sector, keeping home sales below historical expectations. |
High Mortgage Rates Haunt the Housing Market
Major purchases like housing, which traditionally anchor consumer financial security, remain severely restricted by elevated borrowing costs. Although the Federal Reserve opted against raising short-term interest rates this week, long-term borrowing costs remain high, with the average 30-year home loan hovering around 7.25%. Moody’s Analytics Chief Economist Mark Zandi pointed out that housing—the economy’s most interest-rate-sensitive sector—has taken a significant hit, registering negative contributions to GDP in eight of the last ten quarters as would-be buyers stay on the sidelines. Zandi added regarding mortgage rates, I had been hopeful before this run up in rates that mortgage rates would hang around 6%.
