In brief
President Trump claims the U.S. economy is booming, but experts cite a mix of strong growth, rising inflation, and uneven job creation. GDP is expanding faster than the IMF forecasted, helped by big AI data‑center spending, yet tariffs and the Iran conflict push consumer prices up. Household incomes are rising but tiers of the middle class feel the pinch, while the richest benefit most from tax cuts. With a growing deficit and higher borrowing costs, mortgage rates are climbing, tightening the housing market for many.
President Donald Trump has bragged about American prosperity ahead of the 2026 mid‑term elections, pointing to rising incomes, lower inflation and job creation. Yet the numbers paint a more complex picture.
1. GDP Growth is a Hot Performance
The economy is still expanding, running at an annualised 2.2% GDP pace—faster than the International Monetary Fund’s forecast when Trump rolled out new tariffs in April 2025. It’s grown about 3.2% since the start of his second term, topping all G7 peers.
One reason: a boom in AI investment. U.S. companies have poured almost $5 bn into data‑center construction each month.
2. Inflation is on the Rise
Consumer inflation sits at 3.7%, higher than the 3% Trump inherited but still far below the 9% peak in 2022. Tariffs and the Iran conflict have nudged prices higher. Diesel prices hit a record $6.52 per gallon, and staples like beef and coffee have climbed, while eggs fell.
Retailers warn that energy costs raise food prices further, hurting households.
3. Household Incomes Skewed
Median real household income rose 2.6% to $87,460 in 2025, the highest on record. But a study by the Institute on Taxation and Economic Policy shows that the middle‑class got $1,700 less and the poorest $750 less in 2026, while the richest 1% gained $12,560 thanks to tax cuts.
4. Job Creation Slumps
Trump promised “floods” of jobs from tariff‑driven U.S. manufacturing. Since January 2025, about 34,000 jobs a month were added—well below the 122,000 monthly rate in Biden’s final year. Manufacturing employment is now 12.6 million, slightly lower than in 2025. Unemployment remains low at 4.2%, partly due to stricter immigration policies.
5. Borrowing Costs Keep Rising
Government borrowing surged to a $2 trillion deficit (≈6% of GDP) by September 2026, projected to exceed 8% of GDP by 2030. High debt raises the 10‑year Treasury yield above 5%, the steepest since 2007. Mortgage rates have climbed to 7.4% from 6.9% at Trump’s start, squeezing home‑buyers and discouraging move‑ups among existing homeowners.
These higher borrowing costs could amplify future financial risks, according to the IMF.
For more interactive data, explore the embedded visualisations linked throughout the article.
