President Donald Trump kicked off his midterm campaign travel this week with a bipolar economy: huge growth but plummeting consumer confidence. How he navigates that tension will determine how badly Republicans fare this fall.
This was the president’s message in Iowa on Tuesday night: “Our economy is booming. Incomes are rising. Investment is soaring. Inflation has been defeated. Our border is closed.”
There are good metrics to lean on. The economy grew at an annualized 4.4 percent rate in the third quarter. Inflation, while still above the 2 percent target, has slowed dramatically, with prices rising 2.7 percent year over year in December.
But there’s a growing disconnect between top-line growth — fueled in part by the artificial intelligence build out boom — and how Americans perceive the economy. The Conference Board’s consumer confidence index, also released Tuesday, revealed a plunge to its lowest level in 12 years. Trump’s success in securing the border has also been overshadowed by the collateral arrests and chaos of deportation operations in Minneapolis.
Polling shows 58 percent of Americans disapprove of the economy, while 64 percent disapprove of Trump’s handling of the cost of living. About 6 in 10 fear prices will continue to rise at a “high rate.” Almost 7 in 10 expect a year of “economic difficulty.”
“Affordability” has turned into overused shorthand by politicians in both parties. Trump pooh-poohed the term for a while. Now he’s determined to turn the tables. “Every time you hear the word,” he said in Iowa, “remember, they’re the ones who caused the problem.” But voters tend to blame the people they’ve elected, understandably so. They don’t blame Democrats right now, and it’s hard to see how that will change as more time passes.
The Federal Reserve kept interest rates unchanged on Wednesday after cutting rates at its last three meetings. The central bank is mindful that job growth has been decelerating, though there are indications that’s stabilizing. “Uncertainty about the economic outlook remains elevated,” the Fed said in a statement.
A looming Supreme Court decision on the legality of the tariffs adds to the uncertainty. In states like Iowa, with an open Senate race and competitive House contests, the tariffs have taken a heavy toll on agriculture. The $12 billion bailout Trump announced for farmers in December is not enough to make up for the damage of tariffs, which include skyrocketing fertilizer costs. Almost 300 farms filed for bankruptcy between January and September last year, an increase of nearly 40 percent from the year before.
Another challenge for Trump is that he appears distracted by foreign policy at the expense of cost-of-living issues. The president has increasingly tried to convey that he’s focusing on pocketbook worries, only to step on his own messaging. He talked about affordability in Iowa on Tuesday night, but by Wednesday morning, he was warning Iran of looming military strikes (“Like with Venezuela”) if the regime does not negotiate an end to its nuclear weapons program.
This is a problem every president navigates, but it has been especially stark during Trump’s first year back in power. For weeks, the White House promised that Trump would lay out his plans for housing policy at the World Economic Forum in Davos, Switzerland, but that address was dominated instead by defusing a crisis over Greenland he created. Administration officials say Trump plans less foreign travel and more rallies in swing states. He seems to know he has a problem at home, but he cannot help himself.
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