Mortgage rates close to 7%. Gas prices near their highest levels since 2022. A Federal Reserve interest-rate hike for the first time in three years.

Everything from buying a house to filling up your gas tank now costs more than even a week ago-putting affordability back in the spotlight just before midterm elections that will determine control of Congress.

"If you're the average American household, you're probably wondering, 'What did I do to deserve this?'" said Joe Brusuelas, chief economist at RSM.

A robust economy driven in part by President Trump's tax cuts, reduced regulations and historic AI spending has boosted growth and investment. But tariffs and the data-center build-out have also added to inflation. The war with Iran has set off an energy shock that is raising prices for gasoline, diesel and heating oil.

The unemployment rate stands at a low 4.1%. Thanks in part to a gravity-defying stock market, the Federal Reserve reported that household net worth hit $186 trillion in the second quarter of this year-a gain of $26 trillion from the fourth quarter of 2024. A stronger-than-expected August retail sales report this week showed consumer spending remains strong.

"Consider the geopolitical landscape of shocks and uncertainty, and you begin to appreciate the resilience of the U.S. economy," Fed Chairman Kevin Warsh said Wednesday in explaining the decision to raise interest rates.

The yield on 10-year Treasurys-a critical driver of long-term interest rates for consumers and businesses-crossed 5% for the first time since 2023 this week. It closed just below that level Thursday. Futures markets indicate there is about a 50% chance of the central bank raising rates again at its October meeting, a week before Election Day. Most Fed officials project one rate increase by the end of the year.

Consumer prices were up 3.4% from a year earlier in August, extending five years of price pressures on Americans. For five months, wage gains haven't kept pace with inflation and, especially with the sharp increase in gasoline prices over the past few weeks, they aren't likely to keep up this month, either.

That could be consequential in congressional races across the country, especially in places where Democrats have made affordability central to their messaging.

"We've seen some increase in wages. But it hasn't been enough for voters to get to a conclusion that they're in a better position to handle current prices," said David Winston, a veteran Republican strategist and adviser to GOP congressional leadership. "And that's the central question" as voters decide whether Trump and his party have delivered on their economic promises.

Even those workers whose wages are keeping up with inflation might be feeling irked.

University of Chicago Booth School of Business economist Christina Patterson said employees who achieve pay bumps often bear a burden. "You negotiate. You get an outside offer. You switch jobs. You threaten to leave," she said. "All of those actions are costly. They disturb employer-employee relationships. You lose co-workers. You have to move."

The Fed raised rates to cool inflation, but it takes time for changes in policy to affect the economy. Economist Milton Friedman famously noted this lag can "be rather variable." A reasonable guideline is about a year to see the impact of a rate increase on inflation, according to Gregory Daco, chief economist at EY-Parthenon.

Warsh made the case that taming inflation will most help the least well-off. But costs rise first, and that can be a hard sell for Americans who see all their expenses moving in the wrong direction.

Stacy Hislop, a 64-year-old retiree in Michigan, says Social Security payments of about $1,900 a month aren't enough to keep up with rising prices. This year, she withdrew $2,000 from her savings account, leaving her with roughly $13,000 in the bank.

"We're getting to the point where my solutions are starting to disappear," she said.

Hislop canceled a road trip to Tennessee on account of prices at the pump. She's tried to earn extra cash by selling used items like Disney snow globes and '90s-era Tommy Hilfiger clothing on eBay.

"My real nest egg is the house I have," said Hislop, who owns her Battle Creek home outright. "But if interest rates are going up, that's not going to sell very fast."

It isn't just that people see increases in interest rates as something that raises costs for them. Surveys conducted by economists Alberto Binetti, Francesco Nuzzi and Stefanie Stantcheva have shown that many people view Fed rate increases as inflationary. This might be because rate increases occur in conjunction with inflationary environments, and cause and effect get mixed up.

The average rate on a 30-year mortgage climbed to 6.95% over the past week, Freddie Mac reported Thursday. That leaves it just a whisker away from 7%, a level it hasn't hit since right before Trump took office in 2025. As recently as early 2022, rates were just over 3%.

Hislop plans to vote in her state's Senate election for Democratic candidate Abdul El-Sayed, a progressive who has argued Republican rival former Rep. Mike Rogers is out of touch with voters on economic issues.

El-Sayed "is not establishment. He's going to have fresh ideas," Hislop said. "The fact that he lives here and he's concerned about the economy I live in-I like very much."

Trump campaigned in 2024 in large part against price pressures, railing against then-President Biden for mismanaging the inflationary shock of the post-Covid rebound. Trump promised to slash Americans' energy bills and has pressured the Fed to cut rates.

"Our Country is BOOMING with new Investment!" the president said in a social-media post after the Fed's rate increase Wednesday. "LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!"

Trump later told reporters he supported Warsh after the rate increase. "I'm relying on Kevin. But he has a very tough board," he said.

Lower rates would help curb borrowing costs for many of the AI-linked projects that propelled the stock market to records. Even so, "the stock market isn't really an indicator of how families are doing," said Heather Boushey, a member of Biden's Council of Economic Advisers.

One long-popular benchmark of economic conditions is the "misery index," an idea first devised by economist Arthur Okun that rose to prominence in the 1970s. A simple summing up of the inflation and unemployment rate, it now stands at 7.5, higher than the 6.7 it was at in October 2024, just before former Vice President Kamala Harris lost the presidency to Trump.

Inflation hit a multidecade high of 9.1% in June 2022. It has stopped climbing so fast since then, but prices are still rising-on top of the tremendous increases seen during and after the pandemic. Consumer prices are now 27% higher than they were in January 2021, when Biden entered office.

After years of high inflation, "even that middle to upper-middle [income consumer] is acting more like a lower-income shopper these days," Todd Vasos, chief executive of Dollar General, said at a Goldman Sachs investors conference this week.

Once gasoline prices hit $4 a gallon, he said, Dollar General customers tend to shop more often but purchase less on each trip. As for upper-income shoppers, Vasos added, what "we're hearing more and more from them is, 'I don't feel like I'm higher income at $100,000 any longer.'"

While gasoline plays an outsize role in perceptions about affordability, diesel-key to truckers, construction machinery and farming equipment-is surging even higher. On Thursday, average U.S. retail prices hit $6.40-another record-compared with $3.71 a year earlier.

In the northeast, where many families warm their homes with heating oil, a close cousin to diesel, residents are now bracing for colder weather. "We're expecting another record-breaking year where more people are going to need help," said Perkin Simpson, chief executive of Generation Power CT, a Connecticut nonprofit that provides financial aid for heating oil.

This year is the first ever when the group's up-to-$500 grants won't cover the 100-gallon minimum many suppliers require for home deliveries. While some vendors have made exceptions so far, Simpson fears even higher prices this winter could change that. "Are individuals going to be left out in the cold?"