U.S. inflation strains Trump’s economic standing

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U.S. inflation and Trump

Highlights

U.S. headline CPI inflation rose 3.7 percent year-on-year in September, exceeding the 3 percent annual wage increase and eroding real incomes.
Despite 60 consecutive months of sub-4.5 percent unemployment, the average real wage is down 1.2 percent from its November 2025 peak, dampening public approval of Trump's economic performance.
Average 30-year mortgage rates have increased by about 50 basis points since Trump returned to office and 1.4 percentage points since February, intensifying household affordability pressures.

Inflation pressure and voter backlash

As reported by Financial Times, September data show U.S. headline CPI inflation rising 3.7 percent from a year earlier, outpacing the 3 percent annual increase in average wages in the same month. The article argues that this mismatch is leaving workers behind and weighing on public views of the president’s economic record, despite broader signs of strength in the labor market and consumption.

It points to recent polls showing about two-thirds of respondents disapproving of Trump’s handling of economic issues. While unemployment remains at or below 4.5 percent for 60 consecutive months and employment among people aged 25 to 54 exceeds pre-pandemic and pre-2008 crisis levels, inflation-adjusted wages have weakened, with the average real wage down 1.2 percent from its November 2025 peak.

Higher borrowing costs are also adding to pressure on households. The average rate on a 30-year mortgage has risen by around 50 basis points since Trump returned to office and by 1.4 percentage points since February, adding to concerns over living costs and affordability.

Policy lessons for the next administration

The commentary says voters tend to judge governments by lived economic outcomes rather than broader macroeconomic explanations. In that view, low unemployment offers limited political protection when households continue to face elevated prices for everyday goods and services.

It also argues that voters connect inflation to policy choices, citing Biden’s 2021 stimulus law, the Iran war’s effect on petrol prices, and Trump’s trade policies as examples that the public associates with higher costs. The piece contends that presidents are elected to solve affordability problems, not merely explain them, and says Trump has not made a serious effort to address those concerns despite campaign promises to end inflation quickly.

Looking ahead, the article argues that the next president should prioritize fiscal discipline, trade liberalization, Federal Reserve independence and productivity-enhancing measures, including avoiding unnecessary AI regulation. It says such steps could help reduce inflation and interest-rate pressure while allowing nominal wages to outpace price growth over time.

In our earlier article on rising long-term Treasury yields and widening U.S. deficits, we explained how rates above 5% are feeding through to higher mortgage costs and broader financing strain for households and the federal government. We also noted that with deficits near $2 trillion and political gridlock limiting the odds of a near-term fiscal deal, elevated borrowing costs could persist and keep affordability pressures in focus.

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