Less than two months before the November election, it is turning into a referendum on President Donald Trump’s second term. The key question that is usually asked in referendum elections like this one is: “Am I better off now than I was two years ago, at the time of the last election?
In answer to that question, the United States is kind of in a schizophrenic place—stuck between statistical indicators of how the economy is doing and individual Americans’ perceptions of how their own personal situation is faring in the Trump economy. Looking at the economic indicators – which at this point are unlikely to change between now and November – the performance is fairly mixed. Not great, but not horrible.
Yet most Americans’ perception of the economy and their own individual situation is increasingly negative. As Joe Biden and the Democrats found out in the 2024 election, oftentimes “perception is reality.” And that clearly has President Trump and the Republicans worried about the upcoming election. Recently, he said the economy is booming, but if it were, why would he have to offer a financial sweetener of $5000 to each American adult? Some are calling it an electoral bribe that would likely add another trillion dollars to the national debt.
Let’s look at some of the key economic indicators.
Economic growth. The nation’s economic growth in the first part of the year was decent at 2.1 percent, but it slowed dramatically to 1.5 percent in the second quarter (April-June), well below economists’ estimates. However, most economists expect the economy to gain steam later in the year, but the Iran war and the unpredictability of the Trump tariffs create a lot of uncertainty around forecasts. On the positive side, the stock market and the S&P 500 is up a robust 26 percent since the start of this Trump administration, but unfortunately only a small minority of Americans benefit from that since only 10% of the wealthiest Americans own 90% of the stocks.
Unemployment. It’s hard to say if the glass is half empty or half full. Unemployment remains relatively low at 4.1 percent; however, that is a sizable increase from mid-2023 under President Joe Biden when it was around 3.5%. That 0.6% increase represents nearly 10 million more Americans out of work. Until recently, new hiring was sluggish, but in August the economy added 162,000 jobs, almost triple the 55,000 jobs forecast by economists. Signs of a new turnaround?
Higher interest rates…Other red flags for the economy include the Federal Reserve recently raising interest rates in order to cool inflation. However, the Fed’s decision to raise rates will likely hurt some borrowers for home mortgages and auto loans. Higher interest rates will exacerbate housing unaffordability by increasing construction costs. Robert Dietz, chief economist at the National Association of Homebuilders, says the Fed’s recent rate hike will increase the cost of financing for builder and land developer loans, which are more directly connected to short-term interest rates.”
… and higher borrowing costs, alarming national debt and bitcoin collapse
In addition, the borrowing costs for the US government have risen sharply in recent weeks, with the 10-year Treasury yield hitting a high not seen since 2007. Borrowing costs have risen substantially amid worries that the national debt will hit a historic high of $40 trillion. The debt has risen across multiple presidents, but much of the recent increase has been driven by President Trump’s budget-busting One Big Beautiful Bill passed in July 2025, which gave massive tax deductions to the wealthiest of Americans. Even the White House-supported bitcoin mania has taken a dive, with investors jittery about an AI bubble and selling off riskier assets. Bitcoin is now below its value level when Donald Trump took office in January 2025.
The economic picture is mixed
Nevertheless, the leading economic indicators aren’t flashing major red. What’s driving a pessimistic outlook among many Americans is the sky-high cost of living, which in turn is contributing to higher levels of uncertainty and anxiety.
Inflation has slowly climbed to 3.4 percent, well above the Fed’s 2.0% target, driven by global energy shocks and supply disruptions stemming from Donald Trump’s war against Iran. While inflation is down from 4.2% in May, it’s higher than 2.9% in 2024 under the Biden administration and has generally been heading in the wrong direction.
Weighing even more on Americans’ minds is the cost of living for fuel, groceries, and utilities, which is really rattling consumer confidence. Combine that with the cost of borrowing, with home mortgage rates climbing to nearly 6.7% (compared with 3.5% in late January 2020), and the American Dream of homeownership continues to fade for many Americans, whether Republicans, Democrats, or independents.
While economic indicators are mixed, Americans don’t weigh them equally. It’s this last indicator, the cost of living, that is most likely going to backfire mightily against Donald Trump and Republicans. Just as it did against Joe Biden and the Democrats in 2024. And Trump’s promise of a $5000 check is not likely to allay these concerns. In fact, it might rebound because, with a $40 trillion debt hanging over this and the next generation’s future, more Americans are realizing the nation’s finances can’t afford such a cheap election trick just to win some votes. Even as housing affordability continues to fade for so many Americans, especially young adults, it’s tantamount to trying to buy off voters with money the nation doesn’t have, saddling young people with even more debt.
On the other hand…consumer spending remains robust?
Given the high cost of living for basic commodities like food, groceries, utilities, and gas at the pump, another mysterious indicator points in another direction. Paradoxically, personal consumption — measuring how much US households spent on goods and services — rose 3.2% year over year, much higher than predictions of 2.2% growth and a sign that Americans are continuing to spend.
But how can this be? If average Americans are beleaguered by high prices and cost-of-living woes, how can they keep spending at such a robust pace?
The answer is simple: Americans are filling the gap by borrowing and taking on more personal and household debt, including credit card and unpaid loans. Credit card balances have reached $1.26 trillion, which is very close to an all-time record. The percentage of credit card balances more than 90 days delinquent rose from 7.6% to 12.8% from mid-2022 through early 2026, as many households live paycheck to paycheck and take on “buy now, pay later” loans.
Auto loan and home equity line of credit (HELOC) balances continue to rise. Auto loan debt has reached $1.71 trillion, a new record high. More households are falling behind on payments, and it wouldn’t take much bad luck for these Americans to wind up delinquent on their loans. More American families are trapped in a cycle of debt, forced to rely more on credit to cover rent, utility bills, and other basic necessities. For too many Americans, the precarity of their individual situations forces them to hang on by their fingernails.
Economic uncertainty weighs on Americans’ minds
Beyond the indicators and numbers, beyond a spiraling cost of living and rising debt levels, a lot of economic uncertainty hangs over the big picture. The on-again, off-again war with Iran (and to a lesser extent the war in Ukraine) and the White House tariffs continually disrupt any sense of stability. In a very real way, Trump and the GOP may end up as victims of their own erratic policymaking, which, as we head into a November election, has many voters on edge.
That uncertainty, combined with real cost-of-living increases, has left consumer confidence low, and polls show that a high percentage of Americans rate the national economy as poor. A recent Gallup poll found that 45% of Americans rate the economy as poor, another 34% rate it as fair, and only 19% rate it as positive. Consumer sentiment, of course, is down among Democrats and Independents, but tellingly it is also down among Republicans. This reality has created a growing gap between mediocre economic indicators showing a few macro-level market gains and everyday household financial stress gripping three-quarters of Americans.
Most likely, this gap between the indicators and public perception is what will hurt Trump and Republicans in this November’s election.
Steven Hill was policy director for the Center for Humane Technology, co-founder of FairVote, and political reform director at New America. See more of his writing at his Substack newsletter DemocracySOS.