American voters in a sour economic mood heading into midterm elections
AI generated
asserted
voters → head → elections
On the eve of elections that will decide whether President Donald Trump’s Republican Party keeps control of Congress, voters’ minds are on the economy, with high and rising prices a key issue and many blaming Trump’s policies, specifically tariffs and the Iran war, for the nagging inflation.
asserted
many → decide → inflation
The numbers, however, tell a more complex story.
asserted
numbers → tell → story
On the upside, the unemployment rate remains historically low, more people than ever are employed, overall economic growth is solid, and the artificial intelligence investment boom has – until recently – been driving up the stock market, padding retirement accounts for millions.
Countering that momentum, of course, is inflation.
asserted
inflation → remain → course
Though not nearly as high as just a few years ago, it is elevated and ever-present enough that people feel the pinch whenever they fill their gas tanks, pay a utility bill or order a meal.
asserted
they → feel → meal
Trump is not on the ballot on Nov 3, but voters have his economic record in mind as they head to the polls.
asserted
they → have → polls
Consumer surveys show the mood has generally deteriorated since Trump’s second term began in January 2025, though there are nuances: One widely tracked measure of confidence published by the Conference Board perked up in October, while the University of Michigan’s consumer sentiment index registered a near-record low.
asserted
index → show → low
Brian Jacobsen, chief economic strategist at Annex Wealth Management, said the confidence index tracks the macroeconomy, while the sentiment index is “more personal”, asking people how they are doing financially and how affordable they find their lives to be.
asserted
lives → say → people
“Sentiment is the bigger driver of election outcomes, but confidence is the bigger driver of markets,” he said.
asserted
he → say → markets
One argument for macroeconomic confidence derives from the labour market.
asserted
argument → derive → market
Firms may not be hiring much, and new graduates are having a hard time finding jobs, but companies are not conducting mass layoffs either.
uncertain
companies → hire → layoffs
The unemployment rate, at 4.2% in September, has measured no higher than 4.5% for five straight years, the longest stretch on record.
asserted
rate → measure → record
Households feel it.
asserted
Households → feel → it
The Conference Board measures the gap between consumers who say jobs are plentiful and those who say they are hard to get, and that differential widened in October, indicating an improved outlook for jobs.
asserted
differential → measure → jobs
The main US equity indexes have notched dozens of record highs in 2026, as Trump frequently reminds attendees at his rallies.
asserted
Trump → notch → rallies
Most Americans hold some stock, though higher-income households have disproportionately more.
asserted
households → hold → more
Outlays by higher-income households, buoyed by the rising value of their stock holdings, have helped underpin consumer spending, which has been a strong driver of economic growth.
asserted
which → buoy → growth
Data last week showed the US economy grew at a 3.4% annualised pace in the third quarter, its strongest performance in 2026.
asserted
economy → show → 2026
“Consumer surveys can be a little gloomy, but the consumer behaviour is quite strong,” Treasury Secretary Scott Bessent told CNBC last week.
asserted
Bessent → tell → CNBC
“Corporate behaviour is actually quite strong, and I think with tax policy, trade policy, energy policy and the regulatory policy, we’ve got a very good mix.
asserted
we → think → mix
AI-related demand is fuelling many of the gains in the stock market and in the real economy, and business investment rose at an annualised 12.7% pace last quarter.
asserted
investment → relate → pace
Still, some economists warn of potential fragility, and cracks may be starting to appear.
uncertain
cracks → warn → fragility
As the midterm elections neared, a wave of corporate earnings results from the likes of Amazon.com and Intel added to growing worries about the sustainability of the AI spending boom, sending indexes such as the Nasdaq Composite sharply lower.
“A sharp reset in AI expectations could undermine corporate confidence, trigger a pullback in capex (capital expenditure) and weigh on GDP growth, just as higher oil prices, tariffs and tighter immigration restrictions push inflation higher, raising the risk of a stagflationary environment in which growth slows even as price pressures persist,” Torsten Slok, chief economist at Apollo Global Management, wrote in a mid-October note.
uncertain
Slok → near → note
Putting such a dire scenario aside, any economist or Federal Reserve official will acknowledge that frustration with inflation is top of mind for many households.
asserted
frustration → put → households
Although it has slowed since its 2022 peak, inflation remains well above the 2% target the central bank equates with its price-stability mandate.
asserted
bank → slow → mandate
For much of Trump’s second term in the White House, wages were growing faster than prices, meaning that workers could expect their paycheques to cover as much or more of the same goods and services as before.
uncertain
paycheques → grow → goods
That situation changed earlier in 2026 after the US and Israel launched attacks on Iran in what has become an eight-month war that has lifted fuel prices globally and contributed to price acceleration more broadly.
asserted
that → change → acceleration
Demand for AI is also adding to inflation, Fed policymakers and economists say.
asserted
policymakers → add → inflation
Wage growth is also slowing.
asserted
growth → slow → ?
Consumer prices and average hourly earnings have both risen about 5.5% since January 2025, data from the US Bureau of Labor Statistics shows.
asserted
data → rise → Statistics
The upshot: From a purchasing-power perspective, workers are no worse off, but also no better off, than when Trump came into office in January 2025.
asserted
Trump → come → January
The US central bank raised its policy rate in September and is expected to increase borrowing costs again in December, delivering what Fed Chairman Kevin Warsh calls “monetary medicine” to bring down inflation without the need “to throw sand in the gears of the economy and throw people out of work”.
asserted
Warsh → raise → work
Longer-term borrowing costs have also risen, adding to the affordability woes that voters have cited as weighing on them.
asserted
voters → rise → them
The combination of 30-year mortgage rates that have topped 7% and a shortage of housing supply that has driven up home prices has conspired to put home purchases out of reach for many people.
asserted
that → top → people
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