How is the US economy really doing under President Trump?

October 20, 2026

President Trump has claimed strong economic performance ahead of midterm elections, citing income growth, reduced inflation, and job creation, though the reality is more nuanced. While the US economy is growing at 2. 2% annually—faster than other G7 nations—and benefiting from an AI investment boom, Trump's tariffs and the US-Israel war with Iran have driven inflation up to 3.

Who is affected

Middle-income American households (middle fifth) - approximately $1,700 worse off
Poorest fifth of American households - approximately $750 worse off
Wealthiest 1% of Americans - approximately $12,560 better off
American voters who wanted to punish Joe Biden for inflation
US retailers dealing with rising energy prices
Consumers purchasing groceries, diesel fuel, beef, and coffee
US technology companies investing in AI and data centers
Manufacturing firms potentially setting up factories in the US

What action is being taken

US businesses are spending $5 billion monthly on building data centers (excluding IT hardware) as of August 2026
American technology companies are making massive investments in AI infrastructure, including constructing data centers around the country
President Trump is boasting about economic performance ahead of midterm congressional elections

Why it matters

The US economy's performance directly impacts Americans' financial well-being and political decisions, with inflation and household income being critical factors that influence voter behavior, as demonstrated by voters' desire to punish Biden for pandemic-era price spikes. The economic impacts are distributed unequally across income levels, with middle and lower-income households bearing the burden of tariffs and higher prices while wealthy Americans benefit significantly from tax cuts. The economy's current health depends heavily on AI investment, creating vulnerability if that spending declines, and the slower job creation contradicts Trump's promises about tariff benefits.

What's next

No explicit next steps stated in the article

Read full article from source: BBC