Fed raises rates again

On September 16, 2026, the Federal Reserve hiked its baseline interest rate by a quarter percentage point to a new range of 3.75% to 4%.

Inflation still elevated

The Fed cited elevated inflation as the reason for the hike. Consumer prices rose 3.4% over the past year, well above the 2% target.

A two-speed economy

The U.S. economy is moving at very different speeds. AI investment is booming while housing and traditional businesses struggle with high costs.

Housing market crushed

High mortgage rates and diminishing affordability are crushing the housing market. Rates are nearing 7%, pricing out many potential buyers.

The lock-in effect

Millions of homeowners financed at 3% or 4% rates, so they're staying put. There's little incentive to sell and buy another home at much higher rates.

“Persistently high mortgage rates are reinforcing the "lock-in" effect for current homeowners.”

Treasury yields spike

The yield on the 10-year Treasury crossed 5% on September 14 for the first time since 2023, driven by inflation concerns and soaring government debt.

Oil adds inflation pressure

The war with Iran has pushed oil prices back above $100 a barrel, adding new inflation pressure through gasoline, diesel, and transportation costs.

AI investment keeps booming

More than half of recent capital-spending growth is attributed to AI buildout. Companies expect huge returns, so higher rates barely slow their investment.

Consumers stretched thin

Consumers are carrying ever more expensive credit card and auto debt. Many are increasingly dipping into their savings despite higher returns on safe assets.

Federal debt tops $40 trillion

As the Treasury issues new debt at higher rates, federal interest costs will gradually rise. The national debt recently topped $40 trillion.