America In Focus: Key inflation gauge surges to 3-year high, mortgage rate climbs

The economy, inflation and how those forces could impact the lives of Americans were front and center over the past week. Trips to the grocery store or gas station are more painful than they were last year, and rising costs are impacting the decisions of both households and businesses.

Here’s a snapshot of prominent economic data and news that occurred over the past week and what it potentially means for you.

The Federal Reserve’s preferred inflation gauge rose to a new three-year high in May as gas prices peaked, a sign rising costs could pose political problems for President Donald Trump and his political party as midterm elections near.

Consumer prices rose 4.1% in May from a year earlier, the Commerce Department said Thursday, the largest annual increase since April 2023. On a monthly basis, inflation was 0.4% last month, matching April’s increase and down from 0.7% in March.

The increase was largely driven by more expensive gas, as well as pricier semiconductors and other computer equipment that are in high demand for the AI buildout.

Apple announced an increase in prices for Macs and iPads, citing a memory chip shortage brought on by the artificial intelligence boom.

The company called the demand spike an “unprecedented challenge” for the consumer electronics industry.

“We have never seen a component price increase this much, this quickly,” the company said in a written statement.

The new, entry-level MacBook Neo will now cost $699, up from $599. The 512 gigabyte MacBook Air now costs $1,299, up from $1,099. The one terabyte MacBook Pro is $1,999, up from $1,699. The 128 gigabyte iPad Air is now $749, up from $599, while the 256 gigabyte iPad Pro Wifi is now $1,199, up from $999.

The U.S. economy expanded at a solid and unexpected 2.1% annual pace from January through March, the Commerce Department reported Thursday in its final estimate of first-quarter growth.

The growth in gross domestic product — the nation’s output of goods and services — marked a rebound from a sluggish 0.5% in the last three months of 2025 when a 43-day federal government shutdown weighed on the economy. Thursday’s numbers were an upgrade from Commerce’s previous first-quarter estimate of 1.6% growth.

Business investment surged, likely due to an investment boom in artificial intelligence. But consumer spending, which accounts for around 70% of U.S. economic activity, fell sharply from fourth-quarter 2025 and from Commerce’s previous estimate in a sign that consumers may be cutting back in the face of higher gasoline prices caused by the war with Iran.

The average long-term U.S. mortgage rate edged higher this week, staying close to 6.5%, where it’s been the last six weeks.

The benchmark 30-year fixed rate mortgage rate rose to 6.49% from 6.47% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.77%.

When mortgage rates rise they can add hundreds of dollars a month in costs for borrowers, reducing their purchasing power.

Borrowing costs on 15-year fixed-rate mortgages, often sought by borrowers refinancing a home loan, also rose this week. That average rate ticked up to 5.84% from 5.81% last week. A year ago, it was at 5.89%, Freddie Mac said.

Fewer Americans applied for jobless aid last week as layoffs remain low despite economic headwinds that are creating uncertainty for businesses.

U.S. applications for unemployment benefits in the week ending June 20 fell by 12,000 to 215,000, the Labor Department reported Thursday. That’s fewer than the 225,000 new applications forecast by analysts surveyed by the data firm FactSet.

Weekly filings for unemployment benefits are considered representative of U.S. layoffs and are close to a real-time indicator of the health of the job market.

US markets rose on the final day of trading during the week after oil prices eased back to where they were before the war with Iran, but drops for AI stocks kept the market in check.

The S&P 500 had its second losing week in the last 13, largely because of a retreat in the tech sector, particularly artificial-intelligence companies and related technology.

Specialist Patrick King, left, and trader Mark Puetzer work on the floor of the New York Stock Exchange, Friday, June 26, 2026. (AP Photo/Richard Drew)

FILE - A shopper looks over Apple MacBook laptops on display in a Costco warehouse on June 2, 2026, in Sheridan, Colo. (AP Photo/David Zalubowski, File)

An electronic billboard with an image of President Donald Trump reads "I love the inflation." - Donald J. Trump June 10, 2026," is seen near I-74 in Cincinnati, Tuesday, June 16, 2026. (AP Photo/Carolyn Kaster)

BISSAU, Guinea-Bissau (AP) — Guinea-Bissau is voting Sunday in a referendum to decide on granting new presidential powers ahead of December's general election, which will return the West African nation to democracy after its latest coup.

A military government seized power in November of last year following a disputed election in which former President Umaro Sissoco Embaló and opposition candidate Fernando Dias both claimed victory.

If passed, the new constitution by the self-styled National Transitional Council will grant more powers to the president and reduce parliamentary representation, among other issues.

The authorities argue that a parliament trimmed from 102 to 65 seats would allow for easier and more robust debates, while new presidential powers would underline the higher authority of the president over the prime minister, which they claim is a source of political instability in the country. Opposition groups reject the claim.

“In a community, there is only one leader. No community or village can have two leaders. We revised the constitution to avoid constant conflict between the president of the republic and the prime minister. We clarified the law and helped the public understand that the president of the republic is the national symbol. It is the president who stands for election in presidential polls,” Gen. Tomás Djassi, the head of the armed forces, said.

But the opposition has called on voters to boycott the referendum, saying it is a path for the head of the military government to amass power and calling it a "source of political instability at all levels".

“This constitution significantly weakens the Prime Minister and the government, subordinates the National People’s Assembly and political parties, and devalues—or even ignores the popular will expressed at the polls, carrying all the attendant risks of political and social division and tension,” Muniro Conté, spokesperson for the African Party for the Independence of Guinea and Cape Verde, told The Associated Press.

Last year's coup in Guinea-Bissau worsened West Africa's democratic crisis, adding it to a growing number of countries in the region under military rule.

Leaders on the continent branded it a “staged” takeover after the military allowed the former president to host a press conference to announce he was being deposed and allowed to leave the country in seemingly favorable circumstances. Skeptics say Embaló had given up the seat to the military after seeing he was losing the election.

Since it gained independence from Portugal in 1973, the only Portuguese-speaking West African country has been rocked by several coups and attempted coups. Before last year’s coup, a failed coup was reported only a month before.

The tiny country of around 2.2 million people has the highest proportion of natural wealth per capita, according to the World Bank, but more than half of the country lives in poverty. The country is a hub for drug trafficking between Latin America and Europe, an issue experts say fuels its political instability.

Nearly 915,000 voters are registered to vote in the referendum, but the majority say the constitution is not a problem.

Bacar Camará, a high school teacher in the capital, Bissau, said he would not be voting and disapproves of the referendum, citing a fraught political and social environment.

“The transitional government should focus on creating conditions for better understanding and reconciliation among Guineans,” he said.

Another resident in Bissau, Carolina Djeme, said the constitution is unfamiliar to her.

"I’ll go vote on Sunday. However, I’ll vote ‘no’ because — honestly, and I think this is the case for many other citizens — I don’t know this new Constitution well, so I can’t vote ‘yes’,” she said.

Analysts say the military government lacks the legitimacy to change the constitution, which has sparked discontent among the citizens.

“The fundamental question is: Who drafted this Constitution, and on whose behalf? To protect which interests or institutions? Who stands to benefit from this Constitution?” Paulino Quadé, a Guinean political analyst, said.

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Adetayo reported from London.

FILE - Guinea-Bissau Transitional President General Horta Inta-A-Na Man, centre, and President of Senegal Bassirou Diomaye Faye walk during an official ECOWAS mission to help resolve Guinea-Bissau's political crisis in Bissau, Guinea-Bissau, on Jan. 10, 2026. (AP Photo/Abubacar Queta, File)