United States President Donald Trump and his predecessor Joe Biden. — Photo: Getty Images via BBC
Economic indicators are not necessarily bad, but public opinion in the United States is negative.
This disconnect dogged Joe Biden into 2024, when leading indicators, while solid, failed to convince many voters that the economy was working in his favor.
Now, Donald Trump faces a different version of the same challenge.
During the 2024 campaign, Trump promised voters quick relief from inflation.
"When I win, I will lower prices immediately," he said.
Fulfilling that promise has been more difficult than expected.
Economic growth remains stable, unemployment remains low and the stock market is near all-time highs.
But the latest inflation report ahead of the midterm elections confirms what voters already know: Prices remain high.
The causes are different.
Biden was dealing with the consequences of the covid pandemic.
Trump faces higher energy prices related to the conflict between the United States and Israel against Iran, as well as the effects of some of his own trade and migration policies.
The political reality, however, is very similar.
Voters do not evaluate the economy by GDP numbers or historic highs in the stock market.
They evaluate it by what they pay at the supermarket, the price of gasoline and their ability to cover their expenses.
Numbers only tell part of the story
Economic growth of 2.2% in the United States would be respectable by the standards of many rich economies.
Germany, for example, has faced difficulties in achieving similar dynamism. And a stable 4.2% U.S. unemployment rate hardly indicates an economy in freefall.
Trump argues that he inherited an economic disaster from Biden and points to strong growth, investment and good stock market performance as evidence that his policies are working.
Following the release of the latest inflation report, White House spokesman Matthew Middleton said the administration's "growth-friendly economic agenda" had eased "Biden's inflation crisis."
Larry Kudlow, a Trump ally and economic commentator, described the current expansion as "the best story ever told" and said "no one will be laid off."
Voters appear to be interpreting a different story: Trump won the presidential election promising to address the high cost of living, but prices continue to rise.
Part of the problem is that wage increases have not kept pace with rising prices.
Average hourly wages rose 3% over the last year, while consumer prices rose 3.7%.
This helps explain why polls continue to show that voters evaluate Trump's performance on the economy negatively.
Same language, different meanings
For Democrats, this dynamic is familiar.
Celinda Lake, an experienced public opinion researcher linked to the Democratic Party, says the problem starts with the way economists and voters use the same words to talk about different things.
"When economists say that inflation is falling, they mean that the pace of price increases has decreased," he says.
Biden based his 2024 campaign on the economy, but voters had a different perception. — Photo: Getty Images via BBC
"When voters say that inflation has fallen, they mean that prices have returned to their previous level. Well, of course that never happens", he explains.
The Biden administration spent much of 2024 highlighting low unemployment, solid growth and falling inflation.
Still, many voters continued to think about the high prices they faced daily.
Lake, who advised Biden's 2020 campaign but was not involved in the 2024 race, says voters evaluate the economy based on their personal experiences, not economic indicators.
“It’s not possible to argue with people about the reality of their lives,” he says.
This may help explain why Trump's challenge looks so much like Biden's.
The Trump Effect
Biden's critics have held him responsible for inflation. But he could point to factors that were largely outside his control, such as the pandemic and its effects on supply chains.
Trump has less room to do this.
Some economists say today's higher prices are at least in part the result of their own policies, including trade tariffs, as well as the economic fallout from the U.S.-Israel war on Iran.
“Inflation is clearly attributable to Donald Trump,” says Peter Morici, a Republican-aligned economist at the University of Maryland.
"It's his tariffs and the war. People know that. They see it," he adds.
Trump's so-called "Liberation Day" tariffs, announced in April 2025, have driven up costs for consumers.
A study by the New York Federal Reserve found that tariffs increased the prices of consumer goods by approximately 2.9%.
American President, Donald Trump. — Photo: Reuters via BBC
The impact could have been greater if Trump had not later lifted some tariffs, reached new trade deals and if the Supreme Court had not blocked him from using emergency powers to impose many more duties on imports.
Then came another setback.
The conflict with Iran has raised oil prices, making gasoline more expensive and putting even more pressure on family budgets.
The White House points to tax cuts, job growth and falling prescription drug costs as evidence it is meeting its commitments to American families.
Furthermore, the government has increasingly adopted policies designed to alleviate economic pressures.
Trump has called for a cap on credit card interest rates and raised the possibility of a $5,000 payment to American adults if Republicans maintain control of Congress.
These measures reflect a political reality familiar to both parties: When voters are worried about prices, arguments about solid growth and low unemployment are rarely enough.
Biden has never found a way to close the gap between the economy's performance and voters' confidence in it.
The question ahead of the midterm elections is whether Trump will be able to do this.
If recent political history is anything to go by, perceptions of the economy may matter more than the economic indicators themselves.
