President Donald Trump has repeatedly claimed that his policies have revitalised the American economy. A closer look at the latest data shows a mixed picture: solid growth and low unemployment coexist with rising prices, uneven household impacts, and a widening fiscal deficit.
Economic growth under Trump
The economy is expanding at a respectable pace. GDP grew at an annualised 2.2% in 2026, a rate that outpaces the other G7 members over the same period. Since the end of 2024, the economy has risen about 3.2%, exceeding the International Monetary Fund’s (IMF) forecast made after the April 2025 tariff announcement. The IMF had initially cut its outlook, citing the negative impact of import duties on investment and consumer spending, but the forecast was later adjusted as Trump eased many of the tariffs.
Inflation and price pressures
While growth is solid, inflation remains a concern. The price of a gallon of diesel hit a record $6.52 in September 2026, and grocery staples such as beef and coffee have risen since Trump returned to office. The IMF notes that without the tariffs, inflation would likely have been lower, but the Iran‑related war on energy supplies has also pushed prices upward. By contrast, the price of eggs has fallen, offering a small reprieve for shoppers.
Household income and distributional effects
Median household income, adjusted for inflation, reached a record $87,460 in 2025, up 2.6% from the previous year. However, think‑tank analyses reveal a stark split in how different income groups fared:
- Middle fifth of households: about $1,700 worse off in 2026 than they would have been without the tariff‑related price hikes.
- Poorest fifth: roughly $750 worse off for the same reasons.
- Richest 1%: an estimated $12,560 better off, largely due to the Trump tax cuts.
These findings align with the Tax Foundation’s estimates, indicating that the benefits of the tax cuts are heavily skewed toward the wealthiest Americans.
Jobs, manufacturing, and immigration
Trump promised a “flood of jobs” from his tariff policy. The data shows an average of 34,000 jobs added each month since he took office, a figure well below the 122,000 jobs per month added in the final year of the Biden administration. Manufacturing employment stood at 12.6 million in September 2026, slightly lower than at the start of Trump’s second term. The administration attributes the low unemployment rate—still at 4.2%—to a tighter immigration stance that has reduced the available labor pool, meaning fewer jobs need to be created to keep the unemployment rate steady.
Government borrowing, debt, and financial markets
Fiscal policy has shifted dramatically. The federal deficit reached $2 trillion in the year to September 2026, about 6% of GDP, driven in large part by the tax cuts. This borrowing has helped sustain GDP growth, but it also raises long‑term risks. The IMF warns that the rising debt and deficit could trigger a future financial crisis. Market reactions are already evident: the 10‑year Treasury yield has climbed above 5%, the highest since the 2007 global financial crisis, and mortgage rates have followed, with a new 30‑year loan costing 7.4% per year—up from 6.9% when Trump returned to the White House. Higher borrowing costs threaten housing affordability and could dampen consumer spending.
Looking ahead
The U.S. economy under President Trump presents a paradox. Growth and low unemployment suggest a resilient macro‑environment, yet inflationary pressures, uneven household impacts, and a swelling fiscal deficit paint a more nuanced picture. Continued investment in AI and data‑centre construction offers a potential engine for future growth, but the sustainability of that boost remains uncertain if private spending slows. Policymakers will need to balance the short‑term gains from tariff and tax policies against the longer‑term risks of debt accumulation and rising living costs for the majority of Americans.