In brief
President Trump’s second term has seen the U.S. economy grow at a solid 2.2% annualised rate, surpassing many forecasts, but inflation remains a headache at 3.7%. While AI investments bolster growth, tariffs and the Iran‑related energy squeeze keep prices up. Household incomes rise but unevenly, with middle and lower‑income families feeling the pinch of higher living costs, and the richest 1% gaining from tax cuts. Job creation has slowed, and a rising federal deficit has pushed borrowing and mortgage rates higher.
President Donald Trump has boasted about a booming economy as the 2024 midterm elections approach. Yet the numbers tell a more nuanced story. In what follows, we unpack the data behind Trump’s key claims and examine the real‑world effects on American households.
1. GDP growth outpaces expectations
According to the latest Bureau of Economic Analysis release, the United States is expanding at an annualised rate of 2.2%. This pace, up 3.2% over the past year, exceeds the growth rates of all other G7 members during the same period. The growth beat the International Monetary Fund’s forecasts following the April 2025 tariff roll‑out, and it slowed only after Trump began easing those duties.
AI spending has also injected capital, with U.S. firms pouring roughly $5 billion per month into data‑centre construction in August 2026 – a near‑doubling of the figure when Trump returned to office.
2. Inflation remains stubbornly high
Consumer prices have risen to a 3.7% annual rate, higher than the 3% level Trump inherited in January 2025, although far below the 9% peak seen under the previous administration. Economists credit tariffs and the Iran‑related energy squeeze for this increase, as evidenced by diesel peaking at $6.52 a gallon in September.
Rising food prices have hit staples such as beef and coffee, whereas eggs have fallen. Retailers warn that the elevated energy bill will force higher shelf prices.
3. Household incomes grow unevenly
The median real income climbed 2.6% year‑on‑year to $87,460 – the highest on record. However, the Institute on Taxation and Economic Policy estimates that middle‑income households are $1,700 behind, and the poorest fifth is $750 worse off, primarily due to tariff‑driven price hikes and the loss of subsidies on health insurance.
In contrast, the richest 1% see an average gain of $12,560, largely from tax cuts. Comparable figures from the Tax Foundation echo these findings.
4. Job creation slows as immigration restricts the labor pool
Trump’s tariff strategy promised a surge in U.S. manufacturing jobs. Since he returned to the White House, the economy has added an average of 34,000 jobs a month – a steep decline from the 122,000 average during the final year of the previous administration.
Manufacturing employment stood at 12.6 million in September 2026, slightly below the level at the start of his term. Yet the unemployment rate remains low at 4.2%, aided in part by aggressive immigration enforcement that has reduced the labor supply.
5. Borrowing costs climb, tightening housing affordability
The federal deficit surged to $2 trillion in the year to September 2026 – roughly 6% of GDP – and is projected to exceed 8% of GDP by 2030. The resulting higher bond yields have pushed the 10‑year Treasury rate above 5%, unprecedented since the 2007 crisis.
Mortgage rates have followed suit, reaching 7.4% for a 30‑year loan, up from 6.9% at the start of Trump’s second term. This squeeze reduces affordability for new buyers and freezes existing homeowners from selling without incurring losses.
Data and analysis sourced from the U.S. Bureau of Economic Analysis, Federal Reserve, IMF, and think‑tank reports.
