Donald Trump's biggest economic problem looks strangely familiar

Donald Trump’s biggest economic challenge looks oddly familiar

The White House is dealing with a familiar problem. The economic figures are not necessarily poor — but public sentiment is.

That same gap troubled Joe Biden in 2024, when strong headline data failed to persuade many voters that the economy was benefiting them.

Now Donald Trump is facing a similar test.

During the 2024 campaign, Trump promised voters quick relief from rising prices.

“When I win, I will immediately bring prices down,” he said.

Keeping that pledge has turned out to be more difficult than anticipated.

Economic growth remains steady, unemployment is still low and the stock market is close to record levels.

Even so, the final inflation report before the midterm elections confirms what voters already understand: prices are still high.

The reasons are different. Biden was dealing with the consequences of the Covid pandemic. Trump is confronting higher energy prices tied to the US-Israel conflict with Iran, along with the effects of some of his own trade and immigration policies.

But the political reality is much the same. Voters are not measuring the economy by GDP or stock market records. They are judging it by grocery bills, petrol prices and whether they can keep up with their expenses.

US economic growth of 2.2% would be solid by the standards of many wealthy countries. Germany, for instance, has struggled to produce similar momentum. And a steady US unemployment rate of 4.2% hardly points to an economy in collapse.

Trump says he inherited an economic mess from Biden, and he cites strong growth, investment and stock market performance as proof that his policies are succeeding.

After the latest inflation report, White House spokesman Matthew Middleton said the administration’s “aggressive, pro-growth economic agenda” had blunted “Biden’s inflation crisis”.

Larry Kudlow, a Trump ally and economic commentator, has called the current expansion “the greatest story never told”, arguing that “nobody is getting fired”.

But voters seem to be seeing a different narrative — one in which Trump won the presidency promising to address the cost of living, only for prices to keep climbing.

Part of the issue is that wages have not kept pace with prices. Average hourly earnings have risen 3% over the past year, while consumer prices have increased 3.7%.

That helps explain why polls continue to show voters rating Trump poorly on his handling of the economy.

For Democrats, the pattern feels familiar.

Celinda Lake, a veteran Democratic pollster, says the problem starts with economists and voters using the same words to mean different things.

“When economists say inflation comes down, they mean the rate of increase has come down,” she says.

“When voters say inflation has come down, they mean the price has returned to what it was. Well, of course, it never returns to what it was.”

The Biden administration spent much of 2024 emphasizing low unemployment, solid growth and easing inflation. But many voters stayed focused on the higher prices they encountered every day.

Lake, who advised Biden’s 2020 campaign but was not involved in the 2024 race, says voters assess the economy through personal experience, not indicators.

“You can’t argue with people about their own lived reality,” she says.

That may help explain why Trump’s challenge looks so much like Biden’s.

Biden’s opponents blamed him for inflation. But he could point to forces largely beyond his control, including the pandemic and its supply-chain aftershocks.

Trump has less room to make that case.

Some economists say today’s higher prices are at least partly the result of his own policies, including tariffs, as well as the economic fallout from the US-Israel war with Iran.

“The inflation is clearly traceable to Donald Trump,” says Peter Morici, a University of Maryland economist who aligns with Republicans.

“It’s his tariffs and the war. People know that. They see it.”

Trump’s “Liberation Day” tariffs, announced in April 2025, have increased costs for consumers.

A study by the Federal Reserve Bank of New York found the tariffs raised consumer goods prices by about 2.9%.

The effect could have been greater if Trump had not later paused some tariffs, reached new trade deals and been blocked by the Supreme Court from using emergency powers to impose many others.

Then another shock hit. Conflict with Iran pushed oil prices higher, raising petrol costs and adding fresh pressure to household budgets.

The White House points to tax cuts, job growth and lower prescription drug costs as evidence that the administration is delivering for American families. It is also increasingly adopting policies designed to ease pressure.

Trump has called for a cap on credit card interest rates and floated the idea of a $5,000 payment to American adults if Republicans keep control of Congress.

Those moves reflect a political reality both parties know well: when voters are worried about prices, arguments about strong growth and low unemployment are usually not enough.

Biden never found a way to close the gap between economic performance and economic sentiment. The question heading into the midterms is whether Trump can.

If recent political history is any guide, perceptions of the economy may matter more than the data itself.