The American economy, by the measures economists prize, is in good health: growth near two and a quarter percent, unemployment steady, stocks close to their peaks. Yet as the country nears midterm elections, households keep judging their situation by the grocery bill and the petrol pump, where prices have outrun paychecks. It is an old tension in politics, one that unsettled Joe Biden, now returning to unsettle Donald Trump, who must persuade a wary public that the numbers they cannot feel are the ones that matter.
Trump's Economic Problem Looks Strangely Familiar: Solid Data, Sour Public Mood
The American economy, by the measures economists prize, is in good health: growth near two and a quarter percent, unemployment steady, stocks close to their peaks. Yet as the country nears midterm elections, households keep judging their situation by the grocery bill and the petrol pump, where prices have outrun paychecks. It is an old tension in politics, one that unsettled Joe Biden, now returning to unsettle Donald Trump, who must persuade a wary public that the numbers they cannot feel are the ones that matter.
The numbers from Washington this autumn are, by most measures, good. The economy is growing at 2.2 percent, unemployment holds at 4.2 percent, and the stock market is near record highs. But the latest inflation report, released before the midterms, confirmed what shoppers already felt: prices remain stubbornly high.
Joe Biden learned this lesson in 2024, when strong data failed to win over voters focused on daily costs. Now Donald Trump faces the same gap, despite promising during his campaign that prices would fall quickly once he returned to office. The arithmetic is simple and unkind: wages are up 3 percent over the past year, while consumer prices have climbed 3.7 percent.
The causes differ. Biden inherited pandemic-era supply chain problems. Trump faces higher energy costs linked to the conflict with Iran, along with the effects of his own tariffs, which a New York Federal Reserve study linked to roughly 2.9 percent higher consumer goods prices. The White House insists it inherited a mess, pointing to growth, investment, tax cuts and falling drug costs as evidence its policies work. Some conservative critics, however, say the tariffs and war are plainly visible to ordinary people.
Democratic pollster Celinda Lake offers a useful explanation: economists say inflation is falling when they mean price increases are slowing, while voters mean prices should return to what they were. That never happens. As a result, the White House is turning to household-focused proposals, including a cap on credit card interest rates and a possible $5,000 payment. Whether these can change how voters feel before the midterms is the question that matters most.
The numbers coming out of Washington this autumn are not bad ones. The US economy is growing at 2.2%, a pace many wealthy countries would welcome; Germany, for one, has struggled to match it. Unemployment is steady at 4.2%, and the stock market sits near record highs. Yet the last inflation report before the midterm elections confirmed what shoppers already knew: prices remain high.
That gap between data and mood is one Joe Biden knew well. In 2024 his administration spent much of the year pointing to low unemployment, solid growth and falling inflation, while many voters stayed fixed on what things cost every day. Now Donald Trump faces a version of the same problem. On the 2024 campaign trail he promised, in his words, that when he won he would immediately bring prices down. Delivering has proved harder than expected.
The arithmetic explains some of the sourness. Average hourly earnings have risen 3% over the past year, while consumer prices have gone up 3.7%, so wages have fallen behind. Polls continue to give Trump poor marks on his handling of the economy.
The causes differ from Biden's. He was dealing with the aftermath of the Covid pandemic and its supply chain troubles. Trump faces higher energy prices tied to the US-Israel conflict with Iran, which pushed oil up and lifted petrol costs, along with the fallout from some of his own trade and immigration policies. His "Liberation Day" tariffs, announced in April 2025, added to consumer costs: a Federal Reserve Bank of New York study found they raised consumer goods prices by about 2.9%. The effect might have been larger had Trump not paused some tariffs, struck new trade deals, and been blocked by the Supreme Court from using emergency powers to impose many others.
The administration rejects the gloomy reading. Trump says he inherited a mess from Biden and cites growth, investment and the stock market as proof his policies work. After the latest inflation report, White House spokesman Matthew Middleton said an "aggressive, pro-growth economic agenda" had blunted "Biden's inflation crisis." Larry Kudlow, an ally and economic commentator, calls the expansion "the greatest story never told" and argues that nobody is getting fired. The White House also points to tax cuts, job growth and lower prescription drug costs.
Critics, including some on the right, see it differently. Peter Morici, a University of Maryland economist who aligns with Republicans, says the inflation is clearly traceable to Trump: "It's his tariffs and the war. People know that. They see it." Trump has fewer external forces to blame than Biden did.
Democratic pollster Celinda Lake, who advised Biden's 2020 campaign but not the 2024 race, says part of the trouble is vocabulary. When economists say inflation has come down, she explains, they mean the rate of increase has slowed. When voters say it, they mean prices have returned to where they were, which never happens. "You can't argue with people about their own lived reality," she says.
The White House is increasingly turning to measures aimed at household pressure. Trump has called for a cap on credit card interest rates and floated a $5,000 payment to American adults if Republicans keep control of Congress. Biden never bridged the distance between economic performance and economic sentiment. Whether Trump can before the midterms is the question, and recent history suggests perception may count for more than the data.
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Economy & Finance