US: Policy Shift Towards Midterm Elections

■ The US government is shifting its policy focus to household support in preparation for the midterm elections.  
■ Personal consumption continues to expand, but the economic sustenance of the middle class may be declining due to high prices and rising interest rates. 
 
   On January 7th, US President Trump requested Congress to advance legislation prohibiting institutional investors from purchasing single-family homes; the following day (January 8th), he instructed two US government-backed housing finance institutions (GSEs) to purchase $200 billion in mortgage-backed securities (MBS). Furthermore, on January 11th, he requested financial institutions to cap credit card interest rates at 10% for one year starting January 20th (the first anniversary of the president's inauguration). This comes against the backdrop of declining affordability for Americans. The US government's repeated demands for monetary easing from the Federal Reserve (FRB) are consistent with these actions and statements. 
Affordability refers to the degree of economic sustenance, meaning the ability of a household to obtain the goods and services necessary for daily life without strain. It is generally measured by comparing household income with the cost (price) of goods and services. As an indicator of housing affordability, the National Association of Realtors (NAR) publishes the Housing Affordability Index (HAI). The HAI recorded its lowest historical value (100.4) in 2006—when signs of the subprime mortgage crisis first appeared—a level that was surpassed in 2022. Since then, until the latest figure of 108.4 in November 2025, it has not shown a significant rebound and remains hovering in the historically low range. The HAI is based on housing prices and personal income, reflecting whether a typical household has achieved an income level sufficient to pass mortgage approvals and purchase a home. Its explanatory variables also include mortgage interest rates; housing affordability is reflected by the balance of personal income, housing prices, and mortgage interest rates. Looking at the components of the HAI, the fact that housing prices have risen faster than household income (median) is the main reason for its decline. Furthermore, while the 30-year mortgage rate has fallen from its previous high of around 7%, it remains hovering at a high level of just over 6%, continuously increasing the burden of mortgage repayments. The demands and instructions from US President Trump mentioned at the beginning of this article can be understood as aimed at improving housing affordability by lowering housing prices and mortgage rates. 

 
The US government has clearly shifted its policy focus to household support, and this inclination is not expected to change, at least not before the US midterm elections in November. Although the consumption contribution of high-income earners, driven by rising asset prices, has prevented a significant slowdown in the overall expansion of personal consumption in the economy, the US government's eagerness to promote affordability policies indicates that, under the influence of factors such as widening income inequality, rising prices, and rising interest rates, even middle-class households are experiencing a decline in their financial sustenance.