President Donald Trump has highlighted the state of the US economy as he approaches the midterm congressional elections, claiming improvements in incomes, lowered inflation, and job creation. He stated, "We have the hottest country anywhere in the world." While the US economy has performed better than anticipated following Trump's "Liberation Day" tariffs enacted in 2025, there is evidence that these tariffs, along with the US-Israel conflict with Iran, have contributed to rising inflation that affects many American households.
Read More
Recent data indicates that the US economy is growing at an annualized rate of 2.2% and has expanded by approximately 3.2% since the end of 2024, outpacing growth in other G7 nations during this period. Initially, forecasts were downgraded due to the anticipated negative effects of Trump’s import duties on investment and consumer spending; however, the administration later eased these tariffs, mitigating some of the expected economic impact. Additionally, investments in artificial intelligence by US technology companies have further supported the economy, with business spending on data centers reaching $5 billion in August 2026, nearly twice the monthly rate when Trump took office again.
Inflation has increased, contributing to voter dissatisfaction with President Joe Biden leading up to the 2024 election, mainly due to price rises following the pandemic. While inflation peaked at 9% under Biden in 2022, it has risen from the 3% rate Trump inherited in January 2025. Economists suggest that inflation would have been lower without the tariffs implemented since Trump’s return to office, though the ongoing conflict with Iran has disrupted global energy prices, resulting in higher domestic inflation and increased food production costs.
Despite average US household incomes rising, they are still impacted by various factors, including the expiration of government subsidies that had made health insurance cheaper. According to the Institute on Taxation and Economic Policy (ITEP), the middle fifth of households are estimated to be about $1,700 worse off in 2026 due to these conditions, while the poorest fifth face an average loss of $750. In contrast, the wealthiest 1% may be better off by about $12,560, primarily due to tax cuts.
Job creation has slowed, with an average of 34,000 jobs added each month since Trump took office in 2025. This slowdown is partially attributed to the administration's immigration policies, which have reduced the workforce size, requiring fewer jobs to maintain current unemployment rates.
Government borrowing has risen during Trump’s second term, primarily due to his tax cuts, contributing to increased US GDP growth. However, this growing deficit has led to higher borrowing costs, with the 10-year US government bond yield now exceeding 5%, the highest level since the 2007 financial crisis. This rise in borrowing costs is impacting mortgage interest rates, further stressing the housing market and making home ownership less affordable for new buyers.