How is the US economy really doing under President Trump?

How is the US economy really performing under President Trump?

President Donald Trump has been touting the strength of the US economy ahead of the midterm congressional elections, saying he has raised incomes, cut inflation and generated jobs.

Trump has repeatedly declared: "We have the hottest country anywhere in the world."

Although the overall US economy is doing better than many anticipated after Trump introduced his sweeping "Liberation Day" tariffs in 2025, there is evidence that those import taxes, along with the effects of the US-Israel war with Iran, have driven inflation higher, with the negative consequences being felt by most American households.

The US economy is also being supported by an AI investment boom, and could weaken if that spending were to fade.

So what does all this mean for the average American? BBC Verify has examined whether the evidence backs the president’s claims.

The broader US economy is expanding at a solid pace by recent American historical standards.

- which is how economists gauge the size of the US economy - and is currently growing at an annualised rate of 2.2%.

Overall, it has risen by about 3.2% since the end of 2024, just before Trump began his second term.

That is more growth than any other G7 leading economy over the same period.

The US growth rate has been stronger than the International Monetary Fund (IMF) predicted.

At the time, it cut its forecasts, pointing to the adverse effect of Trump’s import duties on investment and consumer spending.

It is also worth noting that Trump significantly softened the tariffs in the months that followed, reducing the impact that had initially been expected on the economy.

In recent years, the US economy has also been strongly bolstered by American technology firms pouring huge sums into AI, including by building data centres across the country.

Spending on data centre construction

(excluding the IT hardware inside them) by US businesses in August 2026 was $5bn, nearly twice the monthly level when Trump returned to office.

Many American voters wanted to punish Joe Biden in the 2024 presidential election, blaming him for the hardship caused by a sharp rise in prices after the pandemic.

The current US inflation rate

That is still well below the recent peak of 9% under Biden in 2022, but above the 3% rate Donald Trump inherited in January 2025.

Economists estimate

US inflation would have been lower without the new tariffs Trump imposed after returning to office.

The war in Iran has also helped push up US inflation, through its effect on global energy prices and the major disruption to oil and fuel supplies from the Middle East.

The price of a gallon of diesel in the US

- a fuel used not only by motorists but also widely in agriculture and industry - reached a record $6.52 in September.

Prices for some grocery basics

, external such as beef and coffee have climbed since Trump returned to office, although egg prices have fallen.

And some US retailers have warned

Average US household incomes are still increasing under Trump.

The median income - after inflation is taken into account - rose 2.6% in 2025 to $87,460, the highest ever recorded

.

However, the Institute on Taxation and Economic Policy (ITEP) think tank has estimated the combined impact of the following

- Trump's tax cuts

- The end of extra government subsidies that had made health insurance cheaper for millions of Americans

- Higher-than-expected price increases during Trump’s second term, including those tied to tariffs and the Iran war

ITEP says the middle fifth of households are, on average, about $1,700 worse off in 2026 than they would otherwise have been, while the poorest fifth are around $750 worse off.

By contrast, the richest 1% are estimated to be an average of $12,560 better off than they would have been, mainly because of Trump’s tax cuts.

ITEP’s estimates of the effect of tariffs on American households at different income levels are broadly in line with those of the Tax Foundation think tank

.

Trump said his tariffs would leave America

"flooded with jobs"

Since he returned to the White House, the economy has added an average of 34,000 jobs a month.

​​But that is far below the 122,000 jobs added each month in the final year of Biden’s presidency

.

And the number of Americans working in manufacturing

- 12.6 million in September 2026 - is slightly lower than when Trump’s second term started.

Even so, the

US unemployment rate remains relatively low

One reason is Trump’s immigration crackdown and deportation programme, which has shrunk the available US workforce

US government borrowing has risen during Trump’s second term, partly because of his large tax cuts

.

The federal government deficit - the difference between tax revenue and spending - was

$2 trillion in the year to September 2026

. That is equal to about 6%

And the US deficit is expected to climb to more than 8% of GDP by 2030

.

That elevated level of government borrowing is itself helping to support US GDP growth.

The

IMF has warned that excessive US government borrowing

, which it uses to cover the deficit, and the country’s rapidly increasing national debt are raising the danger of a future financial crisis in America. That would have a severely damaging effect on most American households.

The widening deficit is also one reason the US government is charged more to borrow in financial markets.

The 10-year US government bond yield has climbed sharply since Trump returned to office in January 2025 and is now above 5%, the highest since the global financial crisis in 2007.

That rise in the market cost of US government borrowing also puts upward pressure on mortgage rates for American households.

The interest rate on a new

30-year US mortgage has risen to 7.4%

That has added to difficulties in the US housing market, making homes less affordable for first-time buyers. It has also left many current owners unwilling to move, because doing so would mean giving up their cheaper mortgages, which they took out at lower rates