Federal Reserve Chairman Kevin Warsh said Friday he won't prejudge what the U.S. central bank will do about interest rates at its upcoming meetings in October and December.

Rahm Emanuel thinks Democrats can do a better job linking corruption and affordability concerns ahead of the midterms.

High gas prices are harming many Americans, forcing them to cut back or reduce their savings.

On Thursday, the U.S. Commerce Department release data showing that retail sales rose 0.8 percent in September to US$745 billion, largely driven by higher gasoline prices that boosted consumer spending at gas stations.

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Excluding sales at gas stations, retail sales increased just 0.2 percent during the month, suggesting underlying consumer demand remained subdued.

While rising retail sales are generally seen as a sign of economic resilience, analysts said the September increase offered a less encouraging picture of consumer spending, as higher fuel costs accounted for much of the growth.

“Retail sales definitely looked weak in September,” said Dean Baker, a macroeconomist and co-founder of the Center for Economic and Policy Research. Experts also noted that high gas prices are harming many Americans, forcing them to cut back or reduce their savings.

Mike Johnson:

“Everybody's frustrated about fuel prices, but that's not related to policies. It's not related to the Republicans. This is related to the Strait of Hormuz.”

It is absolutely related to policy and Trump’s war on Iran, which Republicans wholly support. He is a…

— Power to the People ☭🕊 (@ProudSocialist) October 12, 2026

Gary Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, said: “About 50 percent of households are living paycheck to paycheck, and if they are squeezed by gasoline prices, they have to cut back elsewhere. But the other 50 percent just reduce their savings to pay for higher gasoline prices.”

High energy prices could create a new wave of inflation. “The longer energy stays elevated, the more likely it generates a new wave of inflation. Another six months would run this risk,” Hufbauer said.

The data were released just weeks before November’s midterm elections, at a time when underlying prices are already high and gasoline prices threaten to make matters even worse. Republicans could take a beating at the polls over voters’ displeasure with high prices that show no sign of coming down.

However, even if Democrats take control of Congress, the party will have its work cut out after the dust settles, as pushing down gas prices means finding a solution to the war in Iran, which seems improbable at the moment.

At the same time, underlying inflation continues unabated. Experts said getting back to pre-COVID price levels requires the Fed to step in and raise interest rates. However, the central bank has shown no desire to hike rates to the 5 percent level, or higher, that economists say is needed to tame inflation.

Some experts noted that the GOP is caught between a rock and a hard place. Brookings Institution Senior Fellow Darrell West said, “Republicans are caught between fighting inflation and a slowing economy, which is a big problem for them in November.”

“Gas prices should drop when the Iran War ends, but it is not clear how (Donald) Trump brings that conflict to a reasonable conclusion,” West said.

teleSUR/ JF

Source: Xinhua

TOKYO — An unwelcome blast of US inflation is blowing across Asia’s markets. September’s hotter-than-expected price data revived concerns that the Federal Reserve will keep rates higher for longer, threatening fresh pressure on currencies, capital flows and economic growth across the region.

Last month’s 3.7% year-on-year increase in consumer prices didn’t just exceed forecasts. It ensured the Fed is on an even bigger collision course with both the bond market and US President Donald Trump’s White House. It’s arguably the last thing both Trump and US Federal Reserve Chairman Kevin Warsh wanted to see less than three weeks ahead of the mid-term elections.

The post Hot US inflation singes Asia as higher-for-longer Fed rates loom appeared first on Asia Times.

• Have you gotten a raise over the past couple of years? Inflation has likely eaten it away.
• Inflation-adjusted hourly earnings, which had risen after Donald Trump first took office, are now declining.
• And there are ominous signs that inflation could get worse.

If you've gotten a raise over the last two years, almost all of those gains have now been eaten by inflation.

That is, if you're the average wage-earner, considering the latest statistics released this week showing that prices were rising at a faster clip than expected.

It's more evidence that affordability challenges in the US economy aren't going away. It also means that average hourly pay, which had risen after Donald Trump took office in January 2025, is now right back to where it started, when taking inflation into account.

The average hourly wage was $35.84 in January 2025, according to federal statistics, or $37.79 in today's dollars, adjusted for inflation. The average hourly wage last month was $37.81 — basically unchanged over the past 20 months.

Wednesday's consumer price index inflation report from the Bureau of Labor Statistics came in hotter than expected, with prices up 3.7% over the year in September. Economists had expected a 3.6% increase, and the rate was well above August's 3.4%.

"We read the September CPI report as another piece of evidence that the US is facing a persistent inflation problem," economists at BNP Paribas said in a note to clients.

That problem means high prices — including gasoline that was up 9.1% in September compared to the previous month — are gobbling up pay increases you might get at work.

Heather Long, chief economist at Navy Federal Credit Union, underlined that consumer price growth since 2025 has eroded nearly all wage gains, citing the impact of the war in Iran, which began at the end of February, on Americans' wallets.

"This is a very different picture from President Trump's first term when wages were up over 15%, well above about 8% inflation," Long said. "It helps explain the frustration many households feel right now with the economy."

Higher prices are adding to a general sense of malaise about the economy. The University of Michigan's consumer sentiment index dipped to 46.3 in October, down from 71.7 in January 2025.

Joanne Hsu, the director of the survey, said higher gas prices driven by the Middle East conflict have added to the ongoing cost-of-living pressures over the past several years.

Higher prices and inflation outpacing wage growth can be especially tough for Americans who are on tight budgets or living paycheck to paycheck. "When we look at the majority of the US workforce, people who are middle- and lower-income households, higher costs in things like gas and groceries take up a larger share of their income," said ZipRecruiter economist Nicole Bachaud.

It's important to note, there is more than one way to read the wage numbers as they relate to inflation — and in some ways, workers have actually come out ahead.

For example, average weekly earnings have grown faster over the last year than average hourly earnings, as the number of hours the typical worker works has edged up.

The Trump administration, when asked for comment, highlighted annual earnings. "Under President Trump, private sector workers have seen their wages continue to outpace inflation, with average annual earnings growing by more than $600," said White House spokesperson Matthew Middleton.

Inflation will play a role in the midterms

The midterm elections are in just a few weeks, and affordability will likely be a key concern.

An Economic Innovation Group and Echelon Insights survey in September asked people what elected officials should prioritize most to make life better for workers. The survey said that 45% of American workers wanted officials to prioritize reducing the cost of everyday essentials, and 23% wanted them to focus on making housing more affordable.

Long, at Navy Federal, said the "modest increase" in grocery prices is a silver lining in the latest consumer price index report. Food at home, which includes groceries, rose at a slower pace than April's 2.9%, with prices increasing 1.8% year over year in September.

"But it's inevitable food prices will likely rise in the months ahead as higher diesel and transport costs are passed along to consumers," Long said.

There are other ominous signs that inflation could worsen. Thursday's producer price index report showed that final demand prices rose 1.3% in September, the highest since 2022.

Two years ago, central bankers on three continents all but declared victory over inflation. Markets took them at their word, and plenty of investors built their portfolios on the assumption that the price surge of 2022 was behind us. That assumption was wrong, and the consequences are now showing up in almost every major economy […]

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