Trump's Claims Versus the Evidence: Growth Rises, but Inflation and Tariffs Squeeze US Households

President Donald Trump has been boasting about the performance of the US economy ahead of the midterm congressional elections, claiming he has boosted incomes, reduced inflation and created jobs. He has repeatedly said America is now the hottest country anywhere in the world. The question is whether the evidence supports those claims.

Overall, the US economy is faring better than many expected after Trump launched his sweeping Liberation Day tariffs in 2025. Yet there is also evidence that those import taxes and the impact of the US-Israel war with Iran have pushed up inflation, with the harmful effects felt by most American households. At the same time, an AI investment boom is helping the economy — and it could falter if that spending were to dry up.

The growth picture is comparatively strong. The latest data show US GDP expanding at an annualised rate of 2.2 percent. It has increased by around 3.2 percent overall since the end of 2024, just before Trump took office for his second term. That is more growth than any other member of the G7 group of leading economies over that period.

The growth rate has also been faster than the International Monetary Fund forecast in the immediate wake of Trump's announcement of new tariffs on 2 April 2025. The IMF had downgraded its forecasts then, citing the negative impact of import duties on investment and consumer spending. It is important to note, though, that Trump eased the tariffs considerably in the following months, reducing the impact initially expected.

The US economy has also been heavily supported in recent years by technology companies making massive AI investments, including building data centres around the country. Spending on building data centres by US businesses in August 2026 was 5 billion dollars, almost double the monthly rate when Trump returned to office. That has lifted demand for work in construction, power and related sectors.

The inflation picture, by contrast, does not fully match Trump's claims. The current US inflation rate is 3.7 percent. That is still well down on the recent peak of 9 percent under Biden in 2022, but higher than the 3 percent rate Trump inherited in January 2025. Economists estimate inflation would have been lower without the new tariffs imposed since his return.

The Iran war's impact matters here too. Significant disruption to oil and fuel supplies from the Middle East pushed up global energy prices, which also helped push up US domestic inflation. The price of a gallon of diesel — used not only by drivers but widely in agriculture and industry — hit a record high of 6.52 dollars in September.

Food prices show a mixed picture. Prices of some staples such as beef and coffee have risen since Trump returned to office, though the price of eggs has fallen. Some US retailers have warned that rising energy prices caused by the Iran war will make producing food more expensive and raise prices at the till.

On incomes there is one positive figure. Median income, after adjusting for inflation, rose 2.6 percent in 2025 to 87,460 dollars, the highest on record. Many American voters had wanted to punish Joe Biden in the 2024 election, holding him responsible for the pain of the significant price spike after the pandemic.

The distribution picture is different, however. The Institute on Taxation and Economic Policy estimates that the combined effects of expiring health-insurance subsidies and higher-than-expected price rises linked to tariffs and the Iran war leave the middle fifth of households around 1,700 dollars worse off on average in 2026, and the poorest fifth around 750 dollars worse off. The richest 1 percent, by contrast, are estimated to be an average of 12,560 dollars better off, primarily because of Trump's tax cuts. The Tax Foundation's estimates are broadly similar.

Trump predicted his tariffs would flood America with jobs. The full picture behind that claim is now the argument. Growth and record median income on one side, and tariff- and war-driven price rises with uneven distribution on the other — both pictures belong to the same economy.

Ahead of the midterms, that argument is what matters politically. What voters feel in their pockets — relief from jobs and incomes, or extra costs at the shop and the pump — will be the real test of Trump's economic claims. The evidence suggests the answer differs from household to household.