The average long-term U.S. mortgage rate climbed for the fourth consecutive week, reaching its highest level in a year at 6.66% for a 30-year fixed loan. This surge in borrowing costs directly transfers wealth from aspiring homeowners and existing debtors to financial institutions.
Borrowing costs on 15-year fixed-rate mortgages also rose to 6.04% this week. These escalating rates mean higher monthly payments, deepening the debt burden on working families.
The Cost of Capital
Americans' confidence in the economy plummeted in July, falling to 90.8 from 92.2 in June. This decline reflects the daily struggle against rising costs, even as the U.S. economy expanded at a sluggish 1.5% pace from April through June.
Gas prices ticked up again, reaching $4.11 per gallon. This increase is directly linked to escalating fighting between the U.S. and Iran, a geopolitical conflict that drives up oil prices and squeezes working-class budgets.
The price for a barrel of Brent crude rose 2.1% to $88.68, after careening between $72 and $102 earlier in July. This volatility and subsequent rise translate into higher profits for oil corporations, extracted from the daily commutes and essential needs of millions.
Trips to the grocery store and gas station are more painful than they were one year ago. Rising costs are affecting the decisions of both households and businesses, yet the Federal Reserve's favored measure of inflation remains above its 2% target.
Capital's New Frontiers
Despite the overall economic deceleration, business investment, excluding housing, rose at an 8.4% pace. This reflects a significant surge in investment in artificial intelligence, indicating where capital is flowing to generate new profits, even as broader economic growth for the populace slows.
Consumer spending, which accounts for about 70% of U.S. economic activity, increased at a 3.2% annual clip. However, this spending power is eroded by persistent inflation and rising costs for necessities, forcing households to spend more to maintain their living standards, a form of wage suppression.
The State's Hand
The Federal Reserve left its key interest rate unchanged at around 3.6% after two days of deliberations. While some economists and Wall Street analysts had predicted a hike, this decision offers little relief to consumers.
The average credit card rate remains near 20%, and mortgage rates are the highest since one year ago. This inaction by the central bank demonstrates its primary function: managing the system's contradictions to preserve its foundations, rather than fundamentally addressing the structural underpayment of labor or the privatization of collective resources.
The state's mechanisms protect accumulated wealth, even as workers face increasing debt bondage through high interest rates. U.S. filings for jobless aid in the week ending July 25 rose by 9,000 to 197,000.
The previous week's figure was revised up to 188,000. These numbers represent a continuous churn of workers discarded by the system, even in a supposedly "healthy" job market where costs outpace wages.