Despite the Federal Reserve’s efforts to combat inflation, the US economy is grappling with surging gas prices. As of October 2nd, Shell petrol stations in Alhambra, California have reported prices exceeding $6.00 per gallon, marking a two-decade high. This price surge is primarily attributed to the rise in Brent crude oil prices, which have increased by over 30% in the past three months.
Public sentiment regarding the economy is often measured through indicators such as unemployment and inflation. Following last year’s 40-year high in inflation, it was expected that the Federal Reserve’s decision to raise interest rates would help mitigate inflation and boost economic confidence without leading to increased unemployment.
However, this situation has become more complex due to rising interest rates, particularly at the end of the bond market’s yield curve, which impacts mortgage rates. Structurally high interest rates, a matter falling under Congress’s jurisdiction, have further compounded these challenges.
This narrative highlights the importance of restoring economic confidence and managing price pressures in the face of what appears to be a period of political gridlock. The escalating gas prices serve as a clear reminder of the economic challenges the United States is facing, exacerbated by unexpected mortgage rate increases that are contributing to public dissatisfaction. Addressing these issues effectively is crucial to guiding the economy towards stability.
