Strong Economy, Stubborn Affordability

The data shows resilience: steady growth, low unemployment, cooling inflation. But many Americans remain focused on rising costs and financial strain.

President Donald Trump defended the economy in his State of the Union address, declaring, “Inflation is plummeting, incomes are rising fast.” On paper, he has a case: growth remains steady, unemployment is low, and the stock market hovers near record highs.

The US economy grew 2.2% in 2025, broadly in line with the prior three years of expansion. Wage growth has outpaced inflation for nearly three years, and hiring surprised to the upside in January despite a late-year slowdown and a prolonged government shutdown.

Yet affordability—not aggregate strength—drives voter sentiment. Lower-income households are increasingly strained as housing remains tight and necessities cost more. Delinquencies are rising, and many borrowers are falling behind by more than three months.

Trump has advanced tax cuts, retirement plans for workers without 401(k)s, and efforts to reduce prescription drug costs. But tariffs added roughly $1,000 in tax expenses for the average household last year, according to the Tax Foundation, and remain politically contentious.

Why This Matters

  • Economic data shows resilience, but household-level stress shapes political outcomes.
  • Housing constraints are widening the gap between homeowners and renters.
  • Tariffs and inflation remain sensitive issues ahead of midterm elections.

What’s Next

  • Affordability policies are expected to face scrutiny as they move through the economy.
  • Economic messaging will likely intensify as elections approach.
  • Voter focus is likely to remain centered on everyday costs rather than macro indicators.

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