73% of Americans rate economy fair or poor as inflation climbs to 3.4%

Federal Reserve raises interest rates over inflation concerns

President Donald Trump has continued to repeat his claim that the United States has “the greatest economy in history,” a line he delivered recently at a White House press gaggle. The claim lands against an economic picture that includes higher inflation than when Biden left office, slower economic growth, and gasoline prices that have jumped roughly 50% since the war against Iran began.

“It’s bluster, it’s gaslighting for him to say the economy is the greatest ever,” Darrick Hamilton, chief economist for the AFL-CIO, told the Guardian. “The economy is trending down by many measures. A lot of that has been caused by Trump’s unforced errors.”

Hamilton identified Trump’s tariffs and his war against Iran among the drivers of price increases. Inflation is running at 3.4%, up from 3.0% when Biden left office, and prices have been rising faster than wages, worsening Americans’ affordability problems, the Guardian reported.

Bureau of Labor Statistics figures cited by the Guardian show fuel oil prices up 52% over the past 12 months, ground beef up 7.2%, fish and seafood up 6.5%, coffee up 6.1%, sugar and sweets up 6.1%, and electricity up 3.8%. The administration has cited egg prices as down 23% over the same period, even as gas has jumped to an average of $4.47 per gallon nationwide.

The U.S. economy grew at a 1.5% annual rate in the second quarter, compared with 2.7% during Biden’s final six months in office. By historical standards, full years under Presidents John F. Kennedy, Lyndon Johnson, and Ronald Reagan saw GDP growth average above 6%.

Consumer sentiment has deteriorated sharply amid the combination of stubborn inflation, slower growth, elevated interest rates, and uncertainty over trade wars and artificial intelligence. The University of Michigan’s consumer sentiment index fell in September to its second-lowest reading in the poll’s 74-year history, surpassed only by a May 2026 reading.

Two recent polls measure public attitudes on Trump’s economic record. According to a New York Times/Siena poll, 71% of voters disapprove of how Trump is handling the cost of living. A separate Marquette Law School poll found just 28% of Americans approve of his handling of the economy. Among Republicans, only 29% now say the economy is better than it was a year ago — down from January, when 72% of Republicans said the economy had improved over the prior year.

White House spokesman Kush Desai defended the administration’s record. “President Trump has always been clear about temporary disruptions as a result of the Iran conflict, but the Trump administration has remained laser-focused delivering on the president’s long-term economic agenda on the home front,” Desai said, citing “continued private-sector job growth” and “booming investments.” On inflation, he pointed to “the last two inflation reports showing dramatic month-over-month price reductions in beef, prescription drugs, and auto insurance” as “proof that the administration’s targeted policy interventions to lower costs for American families are delivering.”

Desai also argued that the Biden administration “padded employment growth” by “adding hundreds of thousands of government or government-adjacent jobs that relied on runaway federal spending,” and that “President Trump is slashing regulations and taxes to create sustainable private-sector jobs — not juking the statistics by drumming up government spending.”

The Federal Reserve raised interest rates, which the Guardian attributed to concern over persistent inflation.

The labor market presents a mixed picture. The unemployment rate stood at 4.1%, roughly comparable to Biden’s final year in office but historically unremarkable — the jobless rate fell to 2.5% at one point under Dwight Eisenhower and below 4% at various times under Bill Clinton, Richard Nixon, and Johnson. Job growth has been tepid by recent historical standards, averaging 43,000 per month since Trump returned to office, compared with 145,000 per month during Biden’s last two years. The nation added 162,000 jobs last month, a stronger showing, but the manufacturing sector has lost 35,000 jobs since Trump’s return.

Michael Strain, director of economic policy studies at the American Enterprise Institute, a center-right think tank, offered a more upbeat assessment. “The economy is strong,” Strain said. “The unemployment rate is very low. The economy is very resilient in the face of high energy prices, and consumers are resilient in the face of the trade war.” He also noted that “investment spending is very strong.” But Strain acknowledged that “where we’re not doing well is inflation. It’s eroding wages and income. Inflation is a headwind that households are facing.”

Lindsay Owens, president of the progressive Groundwork Collaborative, offered a more downbeat assessment. “I think it’s going pretty poorly,” she said. “The Federal Reserve just raised interest rates, when Americans were already concerned about high interest rates. That’s not going to do anything to help people who want to buy houses when mortgage rates are high. Americans are feeling that things are pretty grim.”

“Trump’s approval rating on the economy was his superpower in his first term,” she said. “But now it’s absolutely in the toilet.”

Owens argued that AI investment has been central to keeping the economy from contracting further. “The pieces of the economy that are doing well are completely propped up by AI investment,” she said. “That’s the whole story. That’s what Trump has going for him.” But she characterized that position as precarious, citing fierce opposition to data centers in many communities, recent calls to slow AI development for safety reasons, and Wall Street’s growing unease about AI stocks.

A second factor Owens identified is the spending power of the wealthiest Americans. The top 10% by income account for nearly 50% of consumer spending, she said, even as the bottom 50% feel squeezed. That concentration, she argued, has kept consumer spending from faltering even as average households struggle.

“It seems to me the president doesn’t care about how average Americans are doing,” Owens said, pointing to Trump’s May statement that “I don’t think about Americans’ financial situation” when asked how the Iran war was affecting them, and to his recent characterization of rising gasoline prices as “a little higher” and “a very inexpensive price.”

Owens said responsibility for high gas prices and higher inflation rests squarely with Trump. “This is not a situation where the economic conditions are beyond his control,” she said. “He has made a deliberate series of choices that cut against his promises to reduce prices.”

The Yale Budget Lab estimated that the average American household will spend $1,100 more this year because of Trump’s tariffs, the Guardian reported. Mark Zandi, chief economist at Moody’s Analytics, has put the added annual cost to the average household from higher fuel, food, and other prices caused by the Iran war at approximately $1,000.

“The biggest drivers of inflation are his tariffs and the war against Iran,” Owens said. “These are policy-driven price hikes.”

The White House pushed back on the framing of consumer strain. “The hard data of actual consumer spending and retail sales has remained robust throughout President Trump’s term so far,” Desai said. “American consumers remain resilient and are voting with their dollars.”

How consumers really feel will become clear in November, when the midterm elections take place, the Guardian reported.