US midterms & the Trump economy, Pg14

Key Highlights:

• US voters deliver their verdict on the second Trump administration on November 3; most opinion polls suggest the results could go against the Republican Party.
• US GDP has grown from around $30 trillion when Trump took charge in January 2025 to about $33 trillion.
• Inflation was 2.4% when Trump took charge and has since risen to 3.7%, nearly double the Federal Reserve's 2% target.
• Growth in average hourly earnings adjusted for inflation has turned negative every month since March.
• Retail fuel prices have risen almost 50% since the Iran war began.
• Trump has not accepted that his policy choices are hurting citizens, blaming his predecessor Joe Biden for the bad parts of the economy.

Detailed Insights:

• The International Monetary Fund estimates US per capita GDP rose from $86,400 in 2024 to $95,200 in 2026; India's rose from $2,590 to $2,750 in the same period.
• The NASDAQ 100 index rose from just over 21,000 to over 28,000, and the S&P 500 from around 6,000 to about 7,600, since January 2025.
• The article identifies tariffs, which act as a tax on US consumers, and the Iran war's fuel-price spike as the main drivers of the inflation reversal.
• Rising government debt has pushed up the interest rates investors demand, making loans costlier for average Americans.
• The US was the only major economy to return to its pre-pandemic growth path within a year; the article says growth itself is not the problem.
• If results go against Republicans, the remaining two years of the Trump presidency could change course, with Congress able to stall his agenda.

Key Concepts Involved:

• Midterm elections: US polls held midway through a president's four-year term that decide control of Congress.
• Real earnings: Wages adjusted for inflation; negative growth means purchasing power is falling.
• Federal Reserve: The central bank of the United States, which targets 2% inflation over the longer run.
• Tariff: A tax on imports that raises domestic prices, effectively paid by consumers of the importing country.