Trump faces Biden-like challenge as high prices overshadow strong US economy
Voters remain unhappy about living costs despite solid growth and low unemployment, echoing Joe Biden's 2024 struggle.
At a glance
- US growth is 2.2% and unemployment is 4.2%, but consumer prices remain high.
- Trump's April 2025 tariffs raised consumer goods prices by about 2.9%, per the New York Fed.
- Average hourly earnings rose 3% over the last year while consumer prices increased 3.7%.
Donald Trump is confronting the same economic perception problem that dogged Joe Biden during the 2024 presidential campaign: strong headline data is not translating into voter confidence because prices remain high.
The White House is dealing with the disconnect ahead of the midterm elections. Economic growth is holding up at 2.2%, unemployment is steady at 4.2%, and the stock market is near record highs. Yet the latest inflation report confirms that consumer prices are still elevated, and average hourly earnings have risen only 3% over the past year while consumer prices have increased 3.7%.
Trump campaigned on a pledge to bring prices down immediately if he won. Delivering on that has proved difficult. Higher energy prices linked to the US-Israel conflict with Iran, along with the effects of his own trade and immigration policies, have contributed to the cost-of-living pressure.
Tariffs and conflict add to costs
Trump's 'Liberation Day' tariffs, announced in April 2025, raised consumer goods prices by about 2.9%, according to a study by the Federal Reserve Bank of New York. The impact was partly limited because some tariffs were later paused, new trade deals were struck, and the Supreme Court blocked the use of emergency powers for many others.
Conflict with Iran also pushed oil prices higher, increasing petrol costs and squeezing household budgets.
Competing narratives
The administration argues its 'aggressive, pro-growth economic agenda' has blunted what it calls 'Biden's inflation crisis,' White House spokesman Matthew Middleton said. Trump allies, including economic commentator Larry Kudlow, describe the expansion as strong, noting that layoffs remain low.
But voters appear focused on everyday expenses rather than GDP figures or stock market records. Democratic pollster Celinda Lake said economists and voters use the same language differently: when economists say inflation is down, they mean the rate of increase has slowed, while voters mean prices have returned to previous levels, which rarely happens.
University of Maryland economist Peter Morici, who aligns with Republicans, said the inflation is clearly traceable to Trump's tariffs and the war.
The White House points to tax cuts, job growth and lower prescription drug costs as evidence it is helping families. Trump has also called for a cap on credit card interest rates and floated a $5,000 payment to American adults if Republicans retain control of Congress.
Biden never closed the gap between economic performance and public sentiment. Whether Trump can do so before the midterms remains an open question.
Source: BBC Business.
Questions and answers
- Why are voters unhappy with the economy despite strong data?
- Prices remain high and wage increases have not kept pace, with consumer prices up 3.7% against average hourly earnings growth of 3%.
- What did Trump promise about prices during his campaign?
- He said that if he won, he would immediately bring prices down.
- How have Trump's tariffs affected consumer prices?
- A Federal Reserve Bank of New York study found his April 2025 tariffs increased consumer goods prices by about 2.9%.
