The economy, inflation, and their effects on Americans were significant topics last week. Many are feeling the pinch during trips to grocery stores or gas stations, as increased costs affect both households and businesses.

Key Inflation Gauge Worsens

A crucial measure of inflation, closely followed by the Federal Reserve, increased in April to its highest in three years, impacting Americans’ finances and creating political challenges for President Trump and congressional Republicans ahead of midterm elections. Inflation rose to 3.8% in April from 3.5% in March, marking the highest since May 2023, according to the Commerce Department. Monthly prices rose 0.4%, slightly down from March’s 0.7% increase. The report showed price hikes in gasoline, groceries, clothing, and electricity, hinting at persistent inflation.

Consumer Confidence Declines

Consumer confidence in the U.S. dipped as high gas prices and inflation continued, despite near-record stock prices. The Conference Board’s consumer confidence index fell by 0.7 points in May, the first decline after three months of gains. Similarly, the University of Michigan’s consumer sentiment measure reached a record low this month. These factors, especially higher gas and food costs, have exacerbated inflation, outpacing income growth and reducing purchasing power. Many Americans are dissatisfied with President Trump’s economic policies, posing potential electoral issues for Republicans.

Rising Mortgage Rates

The average U.S. long-term mortgage rate climbed again, reaching the highest level in nine months. The benchmark 30-year fixed rate increased to 6.53% from 6.51% the previous week, as reported by Freddie Mac. Although rates remain below the 6.89% level from a year ago, the rise could add significant costs for borrowers, impacting homebuyers’ purchasing power. Mortgage rates have trended upward since the conflict with Iran, which affected oil supplies and contributed to inflation.

Jobless Claims Increase Slightly

More Americans applied for unemployment benefits last week, although layoffs remain low despite uncertainties from the Iran conflict. The Labor Department stated jobless claims went up to 215,000 from 210,000 the previous week. The four-week moving average of claims rose by nearly 6,300 to 209,000. Despite this rise, claims have stabilized in a range of 200,000 to 250,000 since the pandemic recession ended in 2020. While layoffs are minimal, job additions have been weak, with under 10,000 monthly new positions last year, an employment growth low outside recession years since 2002.

Stock Market Performance

Stocks rose on Wall Street, elevating to new all-time highs on Friday. The S&P 500 had slight gains, aiming for nine consecutive winning weeks, the most extended streak since 2023. Major indices appear poised for record closes, despite concerns about the U.S. conflict with Iran and its inflationary impact. European and Asian markets showed similar upward trends.