US Economy's Growth and Inflation Under Trump
Trump claims the US economy is 'the hottest in the world', but data reveals rising inflation, unequal gains, and a shrinking workforce.
President Donald Trump has declared the US economy is 'the hottest country anywhere in the world' ahead of the 2026 midterm elections [1]. While GDP is expanding at a 2.2% annualised rate and outperformed G7 peers since late 2024, this growth is being driven by AI investment and government borrowing, not broad-based prosperity.
Spending on US data centres reached $5bn in August 2026—almost double the level when Trump returned to office—fuelled by tech giants building infrastructure [1]. Yet inflation remains at 3.7%, up from 3% when Trump took office, with diesel prices hitting a record $6.52 per gallon in September, driven by the US-Israel war with Iran. Grocery prices for beef and coffee have also risen, despite falling egg prices.
Median household income, adjusted for inflation, increased by 2.6% in 2025 to $87,460, the highest level ever recorded [1]. However, the Institute on Taxation and Economic Policy (ITEP) found that the middle fifth of households are, on average, $1,700 worse off in 2026 compared to what they would have been without the expiry of health insurance subsidies, higher inflation from tariffs, and energy price spikes linked to the Iran war. The poorest fifth are $750 worse off, while the top 1% are $12,560 better off, primarily due to Trump’s tax cuts.
Job growth has slowed significantly—34,000 jobs added monthly, down from 122,000 under Biden—while manufacturing employment stands at 12.6 million, slightly below the 2025 level [1]. The 4.2% unemployment rate is maintained partly by Trump’s immigration crackdown, which has reduced the available workforce.
The federal deficit reached $2 trillion in the year to September 2026—6% of GDP—and is projected to exceed 8% by 2030, raising concerns about long-term sustainability [1]. The IMF has warned that excessive borrowing could destabilise the economy if not managed.
Despite Trump’s claims of a manufacturing revival, evidence suggests the benefits are unevenly distributed, with wealth concentrated at the top and everyday costs rising for most Americans. The story was first reported by BBC News.
Sources
This article is based on reporting by the outlets below.
- BBC News: How is the US economy really doing under President Trump?
