The US economy has proved more resilient than expected since Donald Trump returned to the White House, but the economic picture remains mixed. While investment in artificial intelligence is supporting growth, tariffs, rising energy prices, slower job creation and high borrowing costs are putting pressure on household purchasing power.

As the US midterm elections approach, President Donald Trump has highlighted the economy’s performance, claiming higher incomes, lower inflation and strong job creation. However, a closer look at the figures reveals a more complicated picture: economic growth remains relatively solid, but its benefits are unevenly distributed, while several indicators continue to weigh on Americans’ daily lives.

Growth Holds Up, Driven in Part by Artificial Intelligence

According to the figures presented in the source material, the US gross domestic product (GDP) is currently growing at an annualised rate of 2.2%. Since the end of 2024, just before Trump began his second term, the economy is reported to have expanded by approximately 3.2%.

This resilience has come despite uncertainty surrounding the new tariffs announced on 2 April 2025 under Trump’s so-called “Liberation Day” trade policy. Economic forecasts were initially revised downward amid concerns that the tariffs would weigh on investment and consumer spending. However, the subsequent easing of some measures reduced their anticipated impact on the economy.

Another major driver of growth has been the substantial investment by US technology companies in artificial intelligence (AI). The construction of data centres and the development of digital infrastructure are boosting business spending and supporting economic activity.

Spending on data-centre construction, excluding computer equipment, reportedly reached $5 billion in August 2026, nearly twice the monthly rate recorded when Trump returned to office. However, this trend also represents a potential vulnerability: a slowdown in AI investment could weaken one of the economy’s current growth engines.

Inflation Is Rising Again

Resilient economic activity has not automatically translated into stronger purchasing power. The inflation rate cited in the source material stands at 3.7%, compared with approximately 3% in January 2025, although it remains below the recent peak of 9% recorded in 2022.

Tariffs can increase the cost of imported goods and the intermediate inputs used by US businesses. Some of these additional costs may eventually be passed on to consumers. At the same time, tensions in global energy markets linked to the war involving Iran and disruptions to supplies from the Middle East have added to domestic price pressures.

Diesel illustrates the scale of these pressures. According to the figures cited, its price reached $6.52 per gallon in September 2026. Because diesel is widely used in transport, agriculture and industry, higher prices can feed through into logistics and food production costs.

Price movements nevertheless vary across products. Beef and coffee have become more expensive since Trump returned to office, while egg prices have declined. However, if energy prices remain elevated, production costs could rise further, creating additional pressure on consumer prices.

Household Incomes Are Rising, but the Benefits Are Uneven

The inflation-adjusted median income of US households reportedly increased by 2.6% in 2025 to reach $87,460, a record level according to the figures cited. However, this does not mean that all households have experienced the same improvement in their financial circumstances.

The combined effects of tax cuts, higher prices and changes in public assistance are producing different outcomes across income groups. Estimates from the Institute on Taxation and Economic Policy (ITEP), cited in the source material, suggest that the middle fifth of households could have approximately $1,700 less in 2026 than under a baseline scenario. For the poorest fifth, the estimated shortfall is around $750.

By contrast, the wealthiest 1% of households are estimated to be approximately $12,560 better off on average, largely as a result of Trump’s tax cuts.

These projections highlight a central question for the US economy: is overall economic growth translating into meaningful improvements in living standards for the majority of the population?

Healthcare costs are another source of pressure, particularly for households affected by the expiration of additional government subsidies that had helped make health insurance more affordable.

The Labour Market Is Losing Momentum

Job creation has slowed since Trump returned to the White House. According to the figures cited, the US economy has added an average of 34,000 jobs per month during his second term, compared with 122,000 per month during the final year of Joe Biden’s presidency.

The manufacturing sector has also yet to show a clear recovery. It employed 12.6 million people in September 2026, slightly fewer than at the beginning of Trump’s second term. These figures do not, at this stage, point to a major manufacturing jobs boom driven by tariffs.

Nevertheless, the unemployment rate remains relatively low at 4.2%. Trump’s restrictive immigration policies and deportation programme may, however, be reducing the size of the available workforce. In such circumstances, fewer new jobs may be needed to keep the unemployment rate stable, without necessarily indicating strong demand for labour.

Public Deficits and Borrowing Costs Add to Economic Risks

The federal budget position is another source of concern. The US federal deficit reportedly reached approximately $2 trillion in the fiscal year ending in September 2026, equivalent to around 6% of GDP. The gap between government revenues and spending has been exacerbated in part by tax cuts.

Heavy reliance on borrowing can support economic demand in the short term, but it also increases government financing needs and the risks associated with the country’s debt trajectory. The International Monetary Fund has generally warned that persistent fiscal deficits and high public debt can create economic and financial vulnerabilities.

This situation may also contribute to elevated bond yields. The source material indicates that the yield on 10-year US Treasury bonds has exceeded 5%, while the interest rate on new 30-year mortgages has reached 7.4%, up from 6.9% when Trump returned to office. These figures should be checked against recent official data before publication.

High mortgage rates reduce households’ borrowing capacity and make homeownership less affordable. They can also discourage existing homeowners with lower-rate mortgages from moving, since purchasing another property would mean taking out a new loan at a higher rate. This can further restrict activity in the housing market.

A Resilient Economy, but Persistent Weaknesses

Trump’s economic record cannot be assessed by GDP growth alone. The US economy is benefiting from substantial technology investment and continues to have a relatively stable labour market. However, tariffs, energy price pressures, slower hiring and high borrowing costs are limiting the benefits felt by many households.

As the midterm elections approach, the administration will be judged not only on its ability to sustain economic growth but also on whether that growth translates into broader improvements in living standards.

For American households, the most consequential indicators remain real purchasing power, access to employment, healthcare costs and the affordability of housing.