US Economy Under Trump: A Mixed Picture of Growth and Inflation
While the US economy shows respectable growth, inflation and household income have been impacted by tariffs and other factors.
President Donald Trump has frequently highlighted the performance of the U.S. economy, claiming significant improvements in incomes, job creation, and inflation during his tenure. An analysis of recent economic data reveals a more nuanced reality.
Economic Growth
The U.S. economy is currently expanding at an annualized rate of 2.2%, a respectable pace by recent historical standards. Since the end of 2024, just before Trump began his second term, the economy has grown by approximately 3.2%. This growth rate has outpaced that of other G7 nations during the same period. The U.S. economy has also been bolstered by substantial investments in artificial intelligence by technology companies, including the construction of new data centers, which saw spending reach $5 billion monthly by August 2026.
Initially, the International Monetary Fund (IMF) had lowered its economic forecasts following Trump's announcement of broad tariffs on imported goods in April 2025, citing potential negative impacts on investment and consumer spending. However, the easing of these tariffs in subsequent months lessened the anticipated economic effects.
Inflation Trends
The current U.S. inflation rate stands at 3.7%. While this is significantly lower than the peak rate of 9% seen in 2022, it remains higher than the 3% rate inherited by Trump in January 2025. Economists suggest that inflation would have been lower without the tariffs introduced since Trump's return to office. Additionally, global energy prices have been affected by the U.S.-Iran war, contributing to an increase in domestic inflation.
Household Income and Costs
Average U.S. household incomes, adjusted for inflation, have risen, reaching a record high of $87,460 in 2025. However, analyses by the Institute on Taxation and Economic Policy (ITEP) suggest that the combined effects of Trump's tax cuts, the expiration of enhanced healthcare subsidies, and higher-than-expected price increases due to tariffs and the Iran war have impacted households differently. According to ITEP, middle-income households are on average about $1,700 worse off in 2026 compared to what they might have been, and the poorest fifth are approximately $750 worse off. In contrast, the wealthiest 1% are estimated to be $12,560 better off, largely due to tax cuts.
Job Creation
While Trump predicted his tariffs would lead to a surge in domestic jobs, the pace of job creation has slowed. Since Trump returned to office, the economy has added an average of 34,000 jobs per month. This figure is considerably lower than the 122,000 jobs added monthly in the final year of the previous administration.
Borrowing Costs
The increasing deficit has contributed to higher borrowing costs for the U.S. government. The yield on 10-year U.S. government bonds has risen above 5%, the highest rate since the 2007 global financial crisis. This increase in government borrowing costs also influences interest rates for American households. The rate on a new 30-year mortgage has climbed to 7.4% annually, up from 6.9% when Trump began his second term. This rise in mortgage rates has reduced housing affordability and made existing homeowners hesitant to move, as they would lose their current lower-interest mortgages.