From mortgages to car loans: How affordability rises and falls with the Fed

Core Viewpoint - The Federal Reserve significantly influences borrowing costs in the U.S., impacting household affordability despite stable prices for goods like homes and vehicles [1][4][6]. Group 1: Economic Impact of High Borrowing Costs - High interest rates have led to increased monthly payments on mortgages, car loans, and credit cards, creating a financial strain on households [1][6][7]. - The cost of borrowing has effectively acted as a second form of inflation, stretching household budgets to their limits [7]. Group 2: Political Ramifications - The current economic situation has become a political liability for President Trump, who faces skepticism from voters regarding his promises to restore affordability [8][11]. - A Fox News survey indicates that 76% of voters rate the economy negatively, a significant increase from previous months [9]. - Voters attribute the economic downturn more to Trump than to Biden, with many feeling personally affected by his policies [11]. Group 3: Future Outlook - Economists suggest that affordability will not improve until the Federal Reserve begins to cut interest rates, which would ease long-term borrowing pressures [7][16]. - The Fed's upcoming decision on interest rates carries significant political and economic implications for the affordability of life for millions of Americans in the coming year [16].