October 2026: slow hiring, a rate hike and 7.28% mortgages

September added 29,000 jobs

The Bureau of Labor Statistics said on October 2 that employers added 29,000 jobs in September. The two months before that were both revised down: August to 133,000 (29,000 fewer than first reported) and July to a loss of 10,000 (31,000 fewer). ADP's private-payroll count, a separate survey released on September 30, showed 90,000 new jobs, more than half of them in private education and health services.

The unemployment rate rose to 4.2% from 4.1%, which the BLS called little changed. The headline rate only counts people who looked for work in the past four weeks, so it misses a lot of slack. Add the people who want a job but haven't searched lately and the part-timers who want full-time hours, and about 17.4 million people want work or more of it:

The BLS's broadest measure of underuse, U-6, was 7.6%. The Job Openings and Labor Turnover Survey (JOLTS) for August, released September 29, showed 7.1 million open jobs, 5.2 million hires, 5.1 million separations and 1.6 million layoffs. Hires and separations were close to equal and layoffs stayed low. People with jobs are mostly keeping them, but anyone looking for work should expect a longer search.

The Fed raised rates with inflation above 3%

The Federal Reserve targets 2% inflation on the PCE measure. Core PCE is at 3.0%, and the all-items figures run higher, largely because of food and energy. Producer prices, what businesses pay, are rising fastest. That can feed through to consumer prices later, so fuel costs reach households that never buy diesel.

On September 16 the Fed raised its target range by a quarter point, to 3.75–4.00%, in a unanimous vote. Its own projections show a median expectation of one more increase in 2026, with four of 18 officials pencilling in two, and PCE inflation not back at 2% until 2029. Meanwhile, the 10-year Treasury yield, which the market sets rather than the Fed, closed at 5.24% on October 1, after a 5.29% close on September 30, its highest since 2002. The government's total debt has passed $40 trillion, and higher long-term yields raise what the government pays to borrow.

A 30-year mortgage now averages 7.28%

Mortgage rates track the 10-year Treasury plus a margin for the extra risk of lending to a household. Freddie Mac's weekly survey put the average 30-year fixed rate at 7.28% on October 1, up from 7.03% a week earlier and about 6% in February. On a $400,000 loan, the monthly payment changes like this:

That works out to about $85 more a month for every $100,000 borrowed. Existing-home sales ran at an annual pace of 3.98 million in August, down 1.2% from a year earlier, while listings rose 5.9% from a year earlier to 1.62 million, about 4.9 months of supply. The median existing-home price was $429,100, up 1.6% from a year earlier, slower than inflation, so prices fell slightly after inflation. Pending sales were down 4.7% from a year earlier, with the West weakest at 6.7% lower.

Builders have more homes for sale: 8.5 months of supply, high by historical standards. The median new-home price, $393,700, is well below the existing-home median. Home completions were down 27.1% from a year earlier, with a Census margin of error of 8.9 points.

Diesel eased, and oil reserves are at a 1982 low

The conflict involving Iran has disrupted shipping through the Strait of Hormuz and, after Houthi attacks, the Bab el-Mandeb strait at the mouth of the Red Sea. Drone strikes shut Saudi Arabia's East-West pipeline around September 13. For households, the effect arrives through diesel, which moves freight, farm equipment and delivery trucks.

The U.S. average diesel price peaked at $6.53 a gallon in the week of September 21 and eased to $6.38 a week later, according to the Energy Information Administration. On October 2, the G7 agreed to release up to 100 million barrels of crude and diesel through the International Energy Agency over four months. The U.S. Strategic Petroleum Reserve held 283.8 million barrels on September 25, its lowest level since 1982, so there's less in reserve if supply gets worse. Fuel costs reach grocery prices with a lag, and in the ISM's September survey a large majority of manufacturers reported higher input prices.

GDP is growing while confidence falls

By the official numbers the economy is still growing. Real GDP grew at a 2.5% annual rate in the first quarter and 2.2% in the second, and the Atlanta Fed's GDPNow model estimated 3.7% for the third quarter as of October 1. The Conference Board's leading index slipped 0.1% in August while its coincident index rose 0.1%, a mixed signal: caution about the months ahead, while current activity is still growing. ISM's manufacturing index was 54.5 in September, still growing, with employment picking up and order backlogs rising.

Surveys of households point the other way. The University of Michigan's sentiment index fell 7% in September to 48.1, down 12.7% from a year earlier, and the Conference Board's confidence index fell to 81.9 from 88.6. People expect prices to keep rising: the Conference Board's median one-year inflation expectation is 5.1%, and Michigan's is 4.6%. When the headline growth numbers look fine and your own budget doesn't, it's often because your costs, like fuel, rent or a new mortgage, are rising faster than the average.

What to change in your budget

• If you budget on your own

  • More than one in four unemployed people have been out of work for over six months, so the higher end of the usual three-to-six-month cushion of essential spending is worth aiming for.
  • Rising rates make card balances more expensive month by month. Paying down a card balance saves its full APR, more than most savings accounts pay.
  • Savings yields tend to rise with the Fed. Check that your emergency money earns a competitive rate in an insured account.

• If you share money with a partner

  • If you both work in the same industry or for the same employer, a slowdown can hit both paychecks at once. Size the cushion for that case.
  • Consider testing a home purchase on one income. At 7.28%, a payment that only works with both salaries leaves no room if one of you is between jobs.

• If you have kids

  • Groceries, fuel and anything delivered tend to follow diesel prices with a lag. Leave room in those categories this fall rather than assuming relief.
  • If you're house hunting for more space, new construction has 8.5 months of supply and a lower median price than existing homes, so there may be more room to negotiate.

Where to keep money, by when you'll need it

1. Next month: bills and spending. Keep it in checking and know what's actually free to spend before payday.
2. Within about five years: the cushion, plus big expenses you can see coming, like school, a car or a roof. Many households keep it in federally insured savings accounts or CDs (the FDIC explains what deposit insurance covers), so a market drop can't shrink it right when you need it.
3. Longer than five years: money that can sit through a downturn. When yields rise, existing bonds' market prices fall, and stock prices can fall for years before they recover. The SEC's investor education site covers how to think about the mix.

Where Miyo fits

Miyo shows what is safe to spend until your next paycheck, after the bills due before then are covered. If groceries or fuel cost more this month, the change shows up in what's left before payday. On the Couple plan, you and your partner see one household picture, and every account has a privacy dial so you choose what's shared.

Common questions