US inflation is outpacing hourly wage growth ahead of the 2026 midterm elections, leaving household costs a challenge for President Donald Trump despite low unemployment and economic growth.

Key Takeaways

  • Consumer prices rose 3.7% over the past year, while average hourly earnings increased 3%.
  • The unemployment rate stood at 4.2%, and economic growth was reported at 2.2%.
  • Trump has proposed a credit card interest-rate cap and floated a conditional $5,000 payment to adults.

US inflation and household buying power

The final inflation report before the midterms showed prices continuing to rise. With average hourly earnings growing more slowly than consumer prices over the past year, those wage gains did not fully keep pace with the overall increase in prices.

A slower inflation rate means prices are rising more slowly, not necessarily returning to earlier levels. Democratic pollster Celinda Lake, who advised Joe Biden’s 2020 campaign, says that distinction can separate economists’ assessments from voters’ experiences.

Growth and prices present competing signals

The figures cited ahead of the election include economic growth of 2.2% and an unemployment rate of 4.2%. The stock market is also near record highs. The White House points to growth, investment and market performance as evidence that its policies are working.

Polls continue to show voters giving Trump poor marks on his handling of the economy. Biden faced a similar gap in 2024, when his administration emphasized low unemployment and falling inflation while many voters remained focused on higher everyday prices.

Tariffs and the administration’s proposals

Some economists attribute part of the current price pressure to tariffs and the economic fallout from the conflict involving the United States, Israel and Iran. A Federal Reserve Bank of New York study found that Trump’s tariffs increased consumer goods prices by about 2.9%. Oil prices also rose during the conflict, lifting gasoline costs.

The White House cites tax cuts, job growth and lower prescription drug costs as evidence of its support for families. Trump has called for a cap on credit card interest rates and floated a $5,000 payment to American adults if Republicans retain control of Congress. Neither measure is presented as enacted.

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