Economic issues will be top of mind for voters at the polls on Nov. 3 in an election that could alter the leadership of Congress. Every seat in the U.S. House of Representatives is up for grabs, as are roughly a third of seats in the Senate. Both are currently controlled by Republicans, but Democrats are favored to win a majority in the House and possibly in the Senate.
While a president is never solely responsible for the state of the economy, this year's midterms will be a referendum, in part, on President Donald Trump's economy -- the good, the bad, and the confounding.
The economy has performed well from a headline perspective in Trump's second term, with gross domestic product growth topping a solid 2% over the past six quarters. Corporate earnings have been on a tear, up by double digits in recent quarters, and the stock market has soared, minus a few stomach-churning detours. Under the hood, however, economic gains have been uneven across industries and households, and higher prices are weighing on consumer optimism.
"Inflation is the dominant story line," says Saira Malik, chief investment officer at Nuveen.
Annual inflation was up 3.7% in September from 3.4% in August. Crude oil and diesel prices, which have risen because of conflict in the Middle East, may soon feed into higher manufacturing and food costs. Trump has also raised tariffs sharply: Despite some legal defeats, the average statutory tariff rate on imports now stands at 11%, up from 2.4% in 2024.
America's mountain of debt may also be on voters' minds, particularly those of bondholders. The yield on the 10-year U.S. Treasury bond posted its largest increase in three decades in the latest quarter. It is sitting just above 5%, as buyers demand more compensation for lending to Uncle Sam. The Federal Reserve raised interest rates by a quarter of a percentage point in September, pushing the cost of servicing the government's roughly $40 trillion debt to multidecade highs.
"All of this is showing up in the polling," says Malik, whose base case is a split Congress, with the House flipping Democratic.
The seven charts below examine various economic aspects of Trump's second presidency. Expect voters to apportion both praise and blame come November.
1. Economic Growth
Growth in real gross domestic product, or GDP adjusted for inflation, has been fairly robust, averaging an annualized 2.2% in the past six quarters. That is well below 2021's stimulus-fueled postpandemic growth rate, but above the 2% rate considered healthy for an advanced economy and higher than that of nearly all other G-7 and major developed economies over the past 18 months.
Economic gains have been driven by sturdy consumer spending and strong business investment, tied largely to the buildout of artificial intelligence. U.S. leadership in AI should power even more growth over the rest of Trump's term, but the outlook for consumer spending may be less promising, suggests Shawn Snyder, an economic strategist at Potomac Fund Management.
"Higher mortgage rates, elevated gas prices for a long period of time, and the Fed tightening should slow the economy over the next six to 12 months," he says.
2. Inflation
Trump campaigned on improving affordability, but persistently elevated inflation has worsened the problem for many U.S. households. While inflation has cooled significantly from the postpandemic era, in large part because the Fed lifted interest rates, price growth recently accelerated and remains well above the central bank's 2% target.
The consumer price index has risen 5.4% since Trump took office. Grocery prices have gained 4.5%, and gasoline prices have soared 39%.
The latest bout of inflation has been exacerbated by the administration's policies, including the imposition of tariffs on many imports and launching war against Iran. Although Trump has called publicly for lower interest rates, the Fed raised its federal-funds rate target range in September to 3.75%-4%, and current Fed Chairman Kevin Warsh, a Trump nominee, has been resolute in stating that the central bank will return inflation to target.
3. Labor Market
Although monthly payroll growth has been uneven during Trump's current term, things are looking up this year. Nonfarm employers added an average of 68,000 jobs a month through September, compared with an average of just 10,000 a month in 2025.
The unemployment rate has stayed relatively stable and measured 4.2% in September, according to the Bureau of Labor Statistics' last monthly data report ahead of the midterms. The unemployment rate has ranged from 4.1% to 4.5% in the past 19 months, pointing to a tight labor market.
That is due largely to constrained labor supply. An aging workforce and stricter immigration policies have curtailed the flow of workers, leaving fewer people actively looking to fill open roles.
4. Wage Growth
Real wage and income growth have slowed during Trump's second term: Median weekly earnings haven't kept pace with inflation for the past six months.
Muted wage-growth likely reflects workers' diminished bargaining power and could persist until there is more churn in the labor market, says Robert Sockin, PGIM's chief U.S. economist. That could take a while, given fewer job openings and businesses' dulled appetite for hiring.
September's 0.1% monthly gain in hourly wage growth is problematic, as it is below the pace needed to sustain real consumer spending, writes Chris Osmond, chief investment officer at Fifth Third Wealth Advisors.
5. Stock Market
If stock market performance determined election outcomes, the president's party would clinch the vote without a fight. Stocks have soared during Trump's second term, enabling many Americans to build wealth, which encourages consumer and business spending and helps drive economic growth.
The S&P 500 gained nearly 28% from Inauguration Day through the end of September, propelled by gains in stocks tied to the boom in artificial intelligence, including the data-center buildout. The administration's deregulatory efforts and tax cuts helped to create an environment that has encouraged business investment and spending.
That said, some of Trump's policies have cost investors, at least in the short term. U.S.-traded stocks lost about 11% in the five trading days following his "Liberation Day" tariff announcement last year. And some of the market's setbacks this year were because of surging oil prices caused by the Iran war.
6. Government Debt
Federal debt has more than doubled in the past decade, to about $40.4 trillion. Roughly $4 trillion of that has accrued since the start of Trump's second term.
Debt as a percentage of economic output has declined in recent years, however, as the economy grows. The debt-to-GDP ratio peaked at 133% in the second quarter of 2020, as the government spent money to stimulate the pandemic-era economy. It has fallen to 121% as of June.
The U.S. and many other developed nations have borrowed vast sums and run large deficits in recent years, periodically rattling bond investors and sparking fears of a "debt crisis." In the U.S., both Democratic and Republican-led administrations have added to the federal debt to a similar degree, says Nuveen's Malik. An electoral sweep by either party could lead to more fiscal spending, creating more pressure on longer-term bond yields.
7. Consumer Sentiment
Consumer sentiment nosedived in 2025 and has continued to decline, notwithstanding strong GDP growth and a decent job market. This year's drop is due largely to rising gasoline prices and other affordability concerns. When prices at the pump spiked after the Iran war started, sentiment headed even lower.
The University of Michigan recorded the lowest sentiment reading on record in May and the second-lowest reading in September, both months when gas prices were particularly elevated. The monthly survey measures respondents' views on the economic outlook, including business conditions, wages, jobs, and personal finances. The university's Index of Consumer Sentiment has declined nearly 33% since Trump took office in 2025 and reflects a souring mood among Americans across the political spectrum.
Sentiment readings have fallen 20% since the start of the year among self-identified Republicans and 13% among Democrats. Respondents ages 18-54 report below-average sentiment. Older Americans are more optimistic.
Sentiment may no longer be a reliable predictor of spending momentum -- the two have become increasingly divorced in recent years. But it has been a rough indicator of voting trends, in particular the prospects for the incumbent president's party.
Write to megan.leonhardt@barrons.com.
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