Working families do not measure economic progress by how much more they spend. They measure it by what their paycheck makes possible: groceries without another sacrifice, a needed home repair, something left for their children’s future. Small business owners measure progress by whether they can pay employees, serve customers, and grow. Washington should apply that same test before deciding Americans can shoulder higher borrowing costs.
September’s retail and food services sales rose 0.8%, according to the Census Bureau. Continued spending is encouraging. But these figures are not adjusted for price changes. They cannot tell us, by themselves, whether Americans purchased more or paid more. A family spending more to maintain its standard of living is not necessarily moving ahead.
Consumers account for roughly two-thirds of America’s economy. Small businesses are America’s job-creation engine. Their fortunes connect through every purchase and paycheck. When essentials consume more household income, customers have less for other purchases. When operating expenses consume more business revenue, employers have less to hire and invest. Growth depends on keeping both sides of that relationship strong.
The Iran conflict has disrupted energy supplies and intensified pressure on fuel costs. The International Energy Agency’s October report links the war to restricted fuel availability and soaring prices, while identifying prolonged supply disruptions as a continuing strain on diesel markets. September’s producer price report shows the pressure on American businesses: diesel prices at the producer level jumped 21% in one month. The Bureau of Labor Statistics attributed nearly half the increase in processed goods prices for business inputs to diesel. Those costs arise inside the production process, before we can determine how much ultimately reaches consumers.
Diesel powers trucks delivering groceries, machinery producing food, and equipment building homes. A grocer facing a higher delivery charge must decide whether to raise prices or absorb the expense. Either choice carries consequences: customers pay more, or the business has less available for improvements and hiring. Higher sales receipts can coexist with a weaker capacity to grow.
Contracts, competition, and other expenses shape those decisions. The producer report does not establish how much of the diesel increase has reached consumers. But its documented contribution to business costs deserves a response aimed at the source of that pressure.
The employment picture makes another rate increase harder to justify. September payrolls grew by just 29,000, following average monthly gains of 45,000 over the preceding year. July and August employment was revised down by a combined 60,000. Unemployment remained at 4.2%, while average hourly earnings rose 3% over the year. These figures suggest limited hiring momentum, rather than an unmistakably overheating labor market.
Consumers are still showing resilience, and inflation remains a concern. August consumer spending increased 0.6% after inflation, demonstrating genuine demand beyond higher prices. Core personal consumption expenditure inflation, the Federal Reserve’s preferred underlying measure, remained at 3% over the year. September core consumer prices rose 0.3%, and producer prices excluding food, energy, and trade services increased 0.5%. Inflation cannot simply be dismissed as diesel.
Taken together, the evidence supports holding rates steady, not declaring victory or rushing to cut. Consumers remain resilient, but hiring is weak, and a substantial energy shock is raising business costs. The Fed should assess whether underlying inflation is persistently accelerating before adding restraint. If broader pressures intensify or expectations deteriorate, the case for action changes. Today’s mixed evidence warrants patience.
Congress and the administration should pursue one complementary objective: lower the cost of supplying Main Street without weakening the infrastructure that serves it. President Donald Trump’s diesel initiative recognizes the need for relief. But deferred taxes remain different from forgiven taxes. Businesses need prompt clarification of what they owe before they can confidently price contracts or invest. Most federal diesel-tax revenue supports the Highway Trust Fund.
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Any broader tax suspension should have a defined expiration, transparent financing, and public reporting on how much relief reaches fuel buyers. Truckers need affordable fuel and dependable roads; paving contractors need manageable expenses and reliable infrastructure investment. Relief must account for both. Alongside it, the administration should identify avoidable fuel supply and distribution barriers and publish specific actions and timelines to resolve them.
Americans work too hard for Washington to mistake a larger bill for a better life. Hold rates steady while the evidence develops, make diesel relief dependable, and address the supply pressures raising costs. Judge success by a family with money left after essentials and a business owner ready to hire. Getting ahead must mean more than paying more to stand still.
Dan Varroney is an economic strategist, founder and CEO of Potomac Core, and author of Rethinking Economic Growth: How Small Businesses Can Help Consistently Grow the Economy.