With the midterm elections approaching, many Americans are focused on the economy. US voters are worn out after years of higher prices. Donald Trump won the presidency in 2024 by promising to lower inflation and undo the damage he said the Biden administration had done to the economy.
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In Trump’s view, his plan is working. At a recent rally in Montana, Trump praised the current economy, describing it as a booming time for Americans. “We’re richer now,” he said. “We don’t have inflation.”
Economic data tells a different story. Inflation, especially gas prices, has soared over the past year. The job market has stalled, and higher interest rates have made it more expensive for Americans to borrow money for loans and mortgages.
These shifts have a real impact on Americans’ lives. A recent Harris poll for the Guardian found that most Americans, including some Republicans, disagree with Trump’s assessment. Nearly two-thirds said they believe the country is in a recession, and many said higher prices have been a major strain. Americans report having trouble saving, and a third of those polled said one unexpected bill could ruin them financially.
Here’s what the data shows about Trump’s second term so far.
Inflation
The rate of price increases has cooled dramatically since its peak in 2022, when pandemic stimulus packages pushed up consumer prices. Inflation peaked at 9.1%, a 40-year high, in June 2022. In January 2025, the month Trump began his second term, inflation had fallen to 3%. By April 2025, it was 2.3%—the lowest rate since 2021.
That’s when things started to get bumpy. After Trump placed tariffs on nearly everything the US imports, inflation began to heat up again, climbing back to 3% in September 2025. After many of his tariffs were paused and eventually ruled illegal, prices started falling again. In January and February 2026, inflation was back down to 2.4%.
The Iran war, specifically its impact on oil prices, has pushed inflation back up to levels not seen since 2023. In May, inflation reached 4.2% and has stayed above 3.4% since.
It has been nearly six years since Americans have seen inflation at a manageable 2% level. Price increases build up over time and can squeeze budgets, which is why this is such a sensitive issue for voters in a crucial election.
Gas prices
In the Guardian’s recent poll with Harris Poll, gas prices were the most common pain point for Americans, with 83% saying they are hurting their current finances.
Soon after the war in Iran began, the Strait of Hormuz—a key route through which a fifth of the world’s oil typically passes—was blocked. Its closure has pushed up prices around the world. Though the US is itself a major oil producer, prices have still surged since the war. The average price of gas was $4.32 per gallon in mid-October, according to AAA, nearly $1.30 a gallon higher than a year ago.
Even in an oil-producing state like Texas, a gallon of gas costs $3.81, compared with $2.64 a year ago. Meanwhile, drivers in California, a state that imports much of its gas from overseas, are paying $6.21 per gallon.
Monthly job figures
The labor market is another measure of the economy’s health, and while the US job market has seen some growth since Trump took office again, figures have fluctuated over the past year. In 2025, a total of 181,000 new jobs were added to the economy, compared with 2.2 million jobs in 2024.
Employers have faced a mixed landscape for hiring: harsher immigration policies, uncertainty from tariffs, and higher prices for supplies have all meant slow job growth. The unemployment rate has remained low, though, at jusUnemployment is just over 4%. Economists call this a “low-hire, low-fire” economy, where employers are neither hiring nor laying off workers.
S&P 500
Though many Americans report struggling in today’s economy, a small handful have never been wealthier. The stock market has continued to soar since Trump took office, recovering from dips seen during his initial tariff announcement and the early days of the Iran war.
Economists largely see AI investment as the leading factor in the stock market’s acceleration. Tech companies are spending billions of dollars investing in data centers and chips needed to power AI.
A line chart showing the latest S&P 500 figures
While many Americans are invested in the stock market through their retirement and pension funds, this growth has really been a boon for the top 1% wealthiest Americans, who own nearly half of the stock market investments.
Economists say higher prices paired with an exuberant stock market has led to a K-shaped economy, where the wealthier have never felt richer while everyday Americans continue to deal with tightened budgets from high prices.
Interest rates
Interest rates are often not as noticeable to consumers as gas or grocery prices, which they come across every day. The impact that higher interest rates have on the economy takes longer to appear and runs deep. Interest rates shape how much Americans pay to borrow money – to run their businesses, pay off car loans and buy their homes.
For the Federal Reserve, shifting interest rates is the tool it uses to balance the economy. Raising rates can cool the economy, bringing prices down, though at the risk of hurting the job market. Lowering rates can stimulate the economy at the risk of leading to more inflation.
A line chart showing federal interest rate
When Trump entered office in January 2025, the Fed was in the middle of a series of interest rate reductions. Officials said they were seeing inflation cooling and slower growth in the labor market. Interest rates were at a range of 4.25% to 4.5% – 1% lower than they were a year ago.
Uncertainty around Trump’s new tariffs would ultimately lead officials to pause the reduction, though the president was still demanding lower rates. As tariffs proved to have less of a long-term effect on prices, the Fed started lowering rates again in fall 2025.
For months, the Fed held off on changing rates as the economic impacts of the war with Iran bore out. But in September, the Fed hiked rates for the first time since 2023, by a quarter point. The Trump-appointed Fed chair, Kevin Warsh, said that “inflation is too high and has been for too long.”
Higher interest rates have already had an impact on mortgage rates, which had dipped below 6% (for a 30-year mortgage) for the first time since 2022 in February, but are now up past 7%.
Frequently Asked Questions
FAQs We Dont Have Inflation Five Charts on the US Economy in Trumps Second Term
1 What does we dont have inflation actually mean
Its a claim that price growth is no longer a problem Economists measure inflation as the yearly percent change in prices If that rate is near the Feds 2 target some argue inflation is over even though prices remain higher than before
2 Wait if inflation is gone why is everything still so expensive
Because inflation is a rate of change not a price level Prices rose sharply in 20222023 and mostly stayed there Slower inflation means prices climb more slowly it doesnt mean they go back down
3 What do the five charts usually show
Typically inflation trending down toward target a stillsolid job market GDP growth holding up consumer spending and sentiment and tariff or policy risks Together they suggest a resilient but uneven economy
4 Is inflation really back to normal
Core inflation has cooled a lot from its 2022 peak but often runs somewhat above 2 So no inflation overstates it much lower inflation is more accurate
5 Are tariffs inflationary
Tariffs act like a tax on imports so they tend to raise some prices The effect depends on how much gets passed to consumers whether businesses absorb it and how the dollar and supply chains respond
6 How are tariffs and inflation connected in this term
Tariffs announced in 2025 raised cost concerns but the measured impact so far has been mixed and gradual Many firms frontloaded imports or absorbed costs so the full effect may show up with a lag
7 Whats the difference between CPI and PCE
CPI tracks a fixed basket of household goods PCE covers broader consumer spending and is the Feds preferred gauge They usually move together but can diverge
8 Why does the Fed care so much about 2
The 2 target anchors expectations If people expect stable prices wage and price setting stays calm which keeps inflation from spiraling
9 What counts as core inflation and why use it
Core strips out food and energy which swing wildly Its a cleaner read on underlying price pressure
