The issue in the US mid-term elections will be the response to high prices, the impact of the Trump administration's inflation measures and trade friction caused by high tariffs.

[Washington Current Affairs] The issue in the US midterm elections is how to deal with the persistent problem of high prices. The Trump administration has taken measures to combat inflation, but trade friction with Canada caused by high tariffs and soaring gasoline prices due to the U.S.-Iranian conflict are causing concerns that high prices will continue for a long time. Although efforts are being made to reduce interest rates in order to improve the quality of life, the effects are lacking.

The economy will remain resilient against the backdrop of increased investment due to the artificial intelligence (AI) boom. Coupled with strong consumer spending, real GDP (gross domestic product) for the April-June period increased by 2.2% from the previous quarter, an upward revision of 0.7 points from the revised figure. There is a sense of optimism at the Federal Reserve, with a senior official saying, ``AI investment will continue to support growth this year.''

Meanwhile, the inflation rate has exceeded the Fed's 2% target for more than five years, and prices remain persistently high. In an NBC TV poll, 55% of Americans said President Trump's policies are having a negative impact on the economy. More and more voters are feeling "frustrated" (as another Fed official put it) as high gas prices put pressure on household budgets.

Hoping to please voters, Trump announced during the election campaign that he would provide $5,000 (approximately 790,000 yen) to every adult citizen if Republicans control both houses of Congress. However, as the federal government's debt expansion continues unchecked, the ``distribution'' policy jeopardizes the country's credibility.

Lowering long-term interest rates, which have a ripple effect on mortgage interest rates, is an important issue for the administration. Treasurer Bessent introduced the unprecedented measure of increasing the buyback of long-term government bonds in order to suppress interest rates, but long-term interest rates have actually skyrocketed due to a combination of factors, including debt expansion and concerns about inflation. The Federal Home Loan Mortgage Corporation announced on October 1 that 30-year fixed mortgage interest rates averaged 7.28% over the past week, the highest level in about three years.

Rising interest rates also lead to a decline in consumption. If business confidence deteriorates, dissatisfaction with the government is likely to increase further.