American voters are exhausted by years of higher prices. Donald Trump won the presidency in 2024 on a promise to reduce inflation and repair the damage he said the Biden administration had inflicted on the economy. In Trump’s opinion, his plan is working. At a recent rally in Montana, Trump boasted about the current economy, framing it as a boom time for Americans. “We are richer now,” he said. “We don’t have inflation.” Economic data paints a different picture. Inflation, especially gas prices, have skyrocketed over the past year. The job market has been stagnant and higher interest rates have meant it is more expensive for Americans to borrow money for loans and mortgages. These fluctuations have a concrete impact on the lives of Americans. A recent Harris poll for The Guardian found that most Americans, including some Republicans, disagree. Nearly two-thirds said they believe the country is experiencing a recession, and many said higher prices have been a problem. Americans report having trouble saving, and a third of respondents said a surprise bill could sink them financially. Here’s what the data shows us about Trump’s second term so far. Inflation The rate of price increases has cooled dramatically since its peak in 2022, when pandemic economic stimulus packages hit 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 fell to 3%. By April 2025, it would be 2.3%, the lowest rate since 2021. A line graph US inflation rate That’s when things start to get tough. After Trump imposed tariffs on almost everything the United States imports, inflation began to rise again, rising back to 3% in September 2025. After many of his tariffs were suspended and ultimately determined to be illegal, prices began to fall again. In January and February 2026, inflation fell again to 2.4%. The Iran war, specifically its impact on oil prices, has sent inflation back to levels not seen since 2023. In May, inflation reached 4.2% and has remained above 3.4% since. It has been almost six years since Americans saw inflation at a manageable 2% level. Price increases accumulate over time and can put pressure on budgets, which is why it’s such a sensitive point for voters during a crucial election. Gasoline prices In The Guardian’s recent survey with Harris Poll, gas prices were the most common pain point for Americans, with 83% saying they are putting a dent in their current finances. A line graph showing average gas prices in the United States. Shortly after the war in Iran began, the Strait of Hormuz, a key route through which a fifth of the world’s oil normally passes, was blocked. Its closure has caused prices to rise around the world. Although the United States is a major oil producer, prices have continued to rise since the war. The average price of gasoline was $4.32 per gallon in mid-October, according to AAA, nearly $1.30 per gallon higher than a year ago. Even for an oil-producing state like Texas, a gallon of gasoline costs $3.81, compared to $2.64 a year ago. Meanwhile, drivers in California, a state that imports much of its gasoline from abroad, pay $6.21 per gallon. Monthly Job Numbers The labor market is another metric used to measure the health of the economy, and while the U.S. labor market has seen some growth since Trump took office again, numbers have fluctuated over the past year. In 2025, a total of 181,000 new jobs were added to the economy, compared to 2.2 million jobs in 2024. A bar chart showing the monthly change in jobs in the US. However, the unemployment rate has remained low, at just over 4%. Economists call this a “low-hire, low-fire” economy, in which employers neither hire nor fire workers. S&P 500 Although many Americans report difficulties in the current economy, a small handful have never been wealthier. The stock market has continued to rise since Trump took office, recovering from declines seen during his initial tariff announcement and the early days of the Iran war. Economists largely consider investment in AI as the main factor in the stock market acceleration. Technology companies are spending billions of dollars on data centers and the chips needed to power AI. A line chart showing the latest numbers for the S&P 500. While many Americans invest in the stock market through their retirement and pension funds, this growth has actually been a boon for the richest 1% of Americans, who own nearly half of the investments in the stock market. Economists say higher prices, coupled with an exuberant stock market, have led to a K-shaped economy, where the richest have never felt richer, while ordinary Americans continue to grapple with tight budgets due to high prices. Interest Rates Interest rates are often not as noticeable to consumers as the prices of gasoline or groceries, which they encounter every day. The impact that higher interest rates have on the economy takes longer to appear and is profound. Interest rates determine how much Americans pay to borrow money—to run their businesses, pay off car loans, and buy their homes. For the Federal Reserve, changing interest rates is the tool it uses to balance the economy. Raising rates can cool the economy and drive down prices, although at the risk of damaging the labor market. Lowering rates can stimulate the economy at the risk of generating more inflation. A line chart showing the federal interest rate When Trump took office in January 2025, the Federal Reserve was in the midst of a series of interest rate cuts. Officials said they were seeing cooling inflation and slower growth in the labor market. Interest rates ranged from 4.25% to 4.5%, down 1% from a year ago. Uncertainty around Trump’s new tariffs would ultimately lead officials to suspend the reduction, although the president still demanded lower rates. As the tariffs proved to have little long-term effect on prices, the Fed began lowering rates again in the fall of 2025. For months, the Fed held off on changing rates as the economic impacts of the Iran war became clear. But in September, the Federal Reserve raised rates for the first time since 2023, by a quarter point. Trump-appointed Federal Reserve Chairman Kevin Warsh said “inflation is too high and has been for too long.” Higher interest rates have already had an impact on mortgage rates, which had fallen below 6% (for a 30-year mortgage) for the first time since 2022, in February, but have now surpassed 7%.
