US GDP Up 3.2% Under Trump, but Median Household Is $1,700 Poorer

By Olivia Hart, Business Bearings

The US economy has grown 3.2% since the end of 2024 — more than any other G7 country — yet the middle fifth of American households are on average about $1,700 worse off in 2026 than they would have been, according to the Institute on Taxation and Economic Policy (ITEP). Growth is real. Its distribution is not even.

President Donald Trump has campaigned hard on the economy ahead of the midterm congressional elections, claiming he has boosted incomes, cut inflation and created jobs. He has repeatedly said: "We have the hottest country anywhere in the world." BBC Verify examined whether the evidence supports that claim. The picture is mixed, and the gaps matter more than the headline.

How fast is the economy actually growing?

GDP is expanding at an annualised rate of 2.2%, respectable by recent US historic standards. That beat the IMF's forecasts made after Trump announced his sweeping "Liberation Day" tariffs on 2 April 2025, when the fund downgraded its outlook, citing damage to investment and consumer spending.

One caveat follows every promise here: Trump eased the tariffs considerably in the months after April 2025, softening the blow the IMF had expected. Growth also leans heavily on an AI investment boom. US businesses spent $5bn on data-centre construction in August 2026, almost double the monthly rate when Trump returned to office — and the economy could falter if that spending dries up.

Takeaway: growth is genuine but narrow, resting on tariff rollbacks and AI capex.

What happened to inflation?

Inflation stands at 3.7% — well below the 9% peak of 2022 under Joe Biden, but above the 3% rate Trump inherited in January 2025. Economists estimate US inflation would have been lower without the new tariffs. The US-Israel war with Iran has added pressure by disrupting Middle Eastern oil and fuel supplies.

Diesel, used across agriculture and industry, hit a record $6.52 a gallon in September. Beef and coffee prices have risen during Trump's second term, though eggs have fallen. Some US retailers have warned that war-driven energy costs will make food production more expensive and raise prices at the till.

Takeaway: prices are rising faster than they would have without tariffs and the war.

Are household incomes really up?

Median US household income rose 2.6% in 2025 to $87,460 after adjusting for inflation — the highest on record. That number sounds unambiguous. It is not.

ITEP estimates the combined effect of Trump's tax cuts, the expiry of health-insurance subsidies and higher-than-expected price rises. Its conclusion: middle-fifth households are around $1,700 worse off in 2026, the poorest fifth around $750 worse off. The richest 1% are an average of $12,560 better off, primarily because of the tax cuts. The Tax Foundation's estimates of tariff impacts by income are broadly similar.

Takeaway: the record headline masks losses for most households and gains at the top.

Where are the promised jobs?

Trump predicted his tariffs would leave America "flooded with jobs" as manufacturers built US factories. Payrolls have added an average of 34,000 jobs a month since his return — down sharply from 122,000 a month in Biden's final year. Manufacturing employment, 12.6 million in September 2026, is slightly lower than when the term began.

Unemployment sits at 4.2%, broadly unchanged, but partly because Trump's deportation programme has shrunk the workforce, meaning fewer new jobs are needed each month to hold the rate steady.

Takeaway: job creation has slowed by two-thirds, and low unemployment partly reflects a smaller labour pool.

What about borrowing costs and the deficit?

The federal deficit hit $2 trillion in the year to September 2026 — roughly 6% of GDP — driven partly by the tax cuts, and is projected to exceed 8% of GDP by 2030. That borrowing itself flatters GDP growth, which the headline figures do not disclose. The IMF has warned that excessive borrowing and rising national debt increase the risk of a future financial crisis.

The 10-year Treasury yield has climbed above 5%, the highest since the 2007 global financial crisis. The rate on a new 30-year mortgage has risen to 7.4% from 6.9% when Trump took office, making homes less affordable and locking existing owners into cheaper mortgages they cannot port to a new property.

Takeaway: fiscal stimulus lifts today's growth while raising tomorrow's borrowing bill for households.

The midterm question is whether voters weigh the 3.2% growth number or the $1,700 hole in their pockets. ITEP's arithmetic suggests the two facts belong in the same sentence — and the deficit projections suggest both carry a bill that has not yet arrived.