US gas prices, bonds and debts all aren't showing what you want

Here in Wisconsin, you may have noticed that gas prices have been on a roller coaster for September. AAA says that regular gas prices in our state are up 43 cents a gallon in the last month (+11.3%). But AAA also says gas prices have gone down 14 cents in Wisconsin over the last week, while there has been little change nationwide.

The average national regular gas price has been over $4 a gallon for more than two months. Combine those two months of $4 gas with the two-and-a-half months above $4 in the Spring and early Summer, and we are nearing the five-and-a-half months that gas was above $4 in 2022. In addition, prices at the pump today are also significantly above what regular gas was in late September 2022.

Continued higher gas prices are a reason why US bonds keep selling off, as there is an expectation of inflation and interest rates going higher and staying there for a while. The 10-year and 30-year Treasury yields have especially spiked in the last 3 months, as oil and gas prices have re-surged.

10-year note

30-year bond

But maybe ongoing inflation is part of Trump/GOP’s plan. Remember how I mentioned that Scott Bessent claimed the growing US debt wasn’t a problem because America "would grow its way” out of it a few weeks ago? Fortune magazine (via Yahoo Finance) followed up on that, and noted how higher US economic output could make debt seem less burdensome.

….the prospect of a hot economy that adds more inflationary pressure has sent Treasury yields soaring, creating a heavier burden for servicing $40 trillion in U.S. debt.

That means the economy is stuck on a hamster wheel, scurrying to outrun borrowing costs and avoid a reduction in speed that allows debt to grow faster than the economy.

For now, GDP is staying ahead of interest rates. While growth adjusted for inflation has been around 2%, nominal growth has been well above 6%—still more than the 5.16% 10-year yield, even after it jumped more than a full percentage point since the Iran war began.

Growth in the third quarter could show even more acceleration, as a recent gauge of U.S. business activity for September hit a five-year high.

There’s one problem with this – you need tax revenues to also grow at a faster rate than the bond yields to limit the growth at the debt. And so far, that isn’t happening, since overall federal tax receipts are only up 3.3% for Fiscal Year 2026 vs FY 2025, with September’s numbers left to wrap up the Federal Fiscal Year.

US tax receipts, FY 2026 vs FY 2025 thru Aug
FY 2025 $4,690.95 Billion
FY 2026 $4,845.45 Billion

That’s not going to cover the 5.25% interest on the existing 10-year bonds- or 5.6% on the 30-year, let alone the additional debt that has to be sold for each year the US runs a budget deficit.

But we would be coming close to having nominal tax revenues increase past the higher debt costs if we had corporations paying the same amount of taxes as they were before Trump/GOP signed Tax Scam 2.0 into law.

US corporate tax receipts, FY 2026 vs FY 2025 thru Aug
FY 2025 $389.61 Billion
FY 2026 $294.86 Billion (-24.3%)

This is directly what should be happening, as corporate profits have gone through the roof in the last year. Seems worthy to mention as debt costs keep spiraling in this country.

And one last item to note - the higher inflation of 2026 means that 2027's Social Security payments will likely rise by the largest rate in four years, and with inflation outpacing wage increases, income taxes go down due to annual indexing that raises how much income is taxed at a lower rate.

I can't see these as good trends for this country'a economic outlook, can you?