Trump says the economy is better than ever. But voters are being crushed by the cost of living

Economic pessimism is deepening in the minds of American voters, but Donald Trump is offering a different sales pitch.

Days before the midterm elections, which will serve as a referendum on the US president’s policies, he buoyantly declared: “We have the single greatest moment in the history of our country in terms of the economy.”

The numbers tell a more complex story. So do the polls, which show voters intend to punish Republicans for broken promises and a cost of living crisis that the majority of Americans blame on the Iran war.

Broadly speaking, the American economy is doing well. Its growth is outpacing all other G7 leading economies, GDP is strong, unemployment is low and industrial output has hit a post-pandemic high.

Yet, the issue that American voters care most about – inflation – sits stubbornly high.

A Telegraph analysis suggests that Mr Trump’s war with Iran is costing the average American household an additional $3,073, as fuel, food and interest rates batter finances.

The conflict is hitting consumers’ pockets just in time for the Nov 3 elections, where Republicans are predicted to face a reckoning.

What went wrong?

When Mr Trump returned to the White House in January 2025, he inherited an economy on the mend and promised lower prices.

Under Joe Biden, US inflation had peaked at 9.1 per cent in June 2022 – the highest in 40 years, as a result of pandemic-related disruptions and the war in Ukraine.

But when Mr Biden left office in 2025, inflation had broadly been stabilised (sitting at less than 3 per cent). Global crude oil markets had also steadied after the shocks of 2022.

In the first 13 months of Mr Trump’s second term, growth was up and optimism was the prevailing outlook. Inflation sat at or below 3 per cent throughout 2025. By February this year, it had sunk to 2.4 per cent.

This was matched by month-on-month increases in real wages. Mortgage rates eased to roughly 6 per cent by late February and gas costs were at their lowest since 2022.

Mr Trump’s “Liberation Day” tariffs drove up the prices of imported goods and rocked the stock markets, but affected the economy far less than his critics thought.

Just as the effects of the tariffs were beginning to fade, however, the Trump administration unleashed Operation Epic Fury on Iran on Feb 28. The military campaign aimed to cripple Iran’s nuclear programme and military capabilities in a swift, decisive strike that would bring down the regime.

As the first Israeli and American bombs dropped, markets fell, and oil prices jumped.

In the days that followed, Iran deployed its most potent weapon – a stranglehold over the Strait of Hormuz, resulting in plummeting exports of oil and gas out of the Gulf. Crude oil quickly increased from $65 to $100 per barrel.

The result was global economic upheaval and an energy shortage that dragged the US into a cost-of-living crisis.

Polling consistently shows that Americans have very little appetite for a long war.

As the conflict in Iran dragged on, so inflation began creeping back up, from 3.3 per cent in March to its peak at 4.2 per cent in May. By September, it had lowered to 3.4 per cent, when the Federal Reserve raised interest rates to 4 per cent.

Nearly eight months into the conflict, petrol has soared to $4.35 a gallon, and diesel is at historic highs of $6.20 a gallon, squeezing consumers and hurting agricultural supply chains in Republican heartlands.

According to data analysed by The Telegraph, an average American household is now paying $77 more a month for fuel than in February. A family of four is now paying $23.84 more a month for food ($286 a year).

Across Mr Trump’s term, consumer prices have risen by 5.4 per cent, compared with 3.8 per cent in Mr Biden’s final 20 months.

Food inflation stands at 4.4 per cent, up from 3.5 per cent under the previous administration, with coffee prices rising by 22 per cent, ground beef by 25 per cent and cereals and baked goods by 3.7 per cent.

In October, the average new US homeowner with a 20 per cent deposit will pay $1,866 more a year on a 30-year fixed-rate mortgage than before the war.

Opinion polls reflect voters’ anger

Just 36 per cent of adults intending to vote said that they approved of Mr Trump’s performance, while 59 per cent disapproved, according to a Siena University/New York Times poll released on Tuesday.

Rural Americans, a key pillar of Mr Trump’s Maga base, are bearing the brunt, according to data and polling.

Put this all together, and it’s clear why voters across party lines are angry and worried.

That gloom was evident in the University of Michigan’s preliminary consumer sentiment index for October – an indicator of how people view their own financial situation and the economy.

It fell to 46.3 per cent, the lowest in the survey’s history.

The reading should be unsurprising. The majority of Americans across party lines believe the US is in recession (61 per cent), according to an October Harris-Guardian poll.

However, official metrics show it is not.

“This parallels what happened during the Biden administration when numbers became good, but public sentiment did not match,” said Heather Hurlburt, associate fellow with the US and North America Programme at Chatham House.

“The numbers are now more mixed. We’re not in a recession but stubborn high prices on things consumers cannot avoid buying lead people to feel they are in a personal recession,” she added.

Citing the impact of the Iran war on both energy and food prices, Ms Hurlburt added: “This felt like a double attack on American consumers when they were already feeling vulnerable.”

In swing states, Democrats have been relentlessly driving home that message.

“Our schools crumble, our factories shutter, our gas prices skyrocket. But when they want war: billion-dollar blank checks,” says Abdul El-Sayed, the Democratic candidate in Michigan’s closely watched Senate race, in his latest campaign advert.

The reality

However, at a macroeconomic level, data suggest the American economy is strong, or at least stable.

The economy grew at a rate of 2.5 per cent between January and March and 2.2 per cent between April and June. There are weaknesses, but experts largely agree it is not as bad as voters believe.

A significant chunk of the US navy is helping to resume oil flows through the Strait of Hormuz, but costs are skyrocketing to get crude out. American oil refineries are working in overdrive, but Mr Trump still cannot shield American voters from prices set by the global market.

Yet, according to Claudio Galimberti, chief economist at Rystad Energy, the impact of the energy crisis “has so far been very contained” in the US, compared to Europe.

America is the largest producer of oil and gas in the world and one of the largest exporters. “This is very different from, say, 2008 when oil prices were very high, and the US was the world’s largest oil importer,” he said. “Back then, high oil prices implied almost automatically a recession.”

Michael O’Hanlon, American policy analyst and senior fellow of the foreign policy programme at the Washington-based Brookings Institution, also cautioned against pessimism.

He noted the war had not been good for growth, but “it has not been catastrophic,” he said, pointing to the low unemployment rate. “Oil prices aren’t as high as once feared given the long war,” he added.

“The main problem is consumer inflation,” he said, predicting that it could be “mitigated within months” if the war ends soon and oil and gas supplies return to normal.

That’s a big “if”, particularly given reports Mr Trump is drawing up plans for renewed strikes against Iran after the midterms. The road ahead for the economy, therefore, looks uncertain.

American voters may have no appetite for a gamble.

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