U.S. Economy and Inflation

Speaking at a Jan. 27 event in Clive, Iowa, Trump kicked off a series of planned midterm stops touting a "booming" economy — saying inflation has been defeated, growth is "exploding" and real wages are up — as the White House frames the tour as an affordability push. That message was undercut by independent data and local indicators (Moody’s/Mark Zandi flagging Iowa at recession risk; Philadelphia Fed ranking Iowa last for growth; November unemployment rising to 3.5%), KFF projections that about 80,000 Iowans could lose coverage and premiums could roughly double for another 117,000, protesters interrupting the event, and the political fallout from the Minneapolis federal‑agent killings and scrutiny of DHS leadership, while Democrats pushed back and Trump repeated an unsubstantiated $18 trillion investment claim.

At the World Economic Forum in Davos, President Donald Trump delivered a combative address attacking Joe Biden’s economic record and urging European leaders to abandon what he called an old 'consensus' of high spending, mass migration and reliance on 'Green New scam' energy. Trump labeled the Biden years a period of 'stagflation' with low growth and high inflation and claimed that after one year back in office the U.S. now has 'virtually no inflation and extraordinarily high economic growth,' asserting his administration has secured record investment commitments of $18–20 trillion after Biden 'secured less than $1 trillion' over four years—figures that sharply conflict with independent data cited by fact‑checkers. The speech comes as Trump is threatening tariffs on several European nations as leverage in his push to acquire Greenland, a move that has already alarmed U.S. allies and drawn criticism from economists who warn new trade shocks could undercut the global expansion he touts. Trump told the Davos audience that when 'America booms, the entire world booms' and cast his rapid turnaround narrative as proof that his economic and energy policies should become the new playbook for Western governments, even as markets and foreign leaders weigh the credibility and risks of his claims. The remarks also extend his domestic political messaging overseas, with heavy emphasis on contrasting his first year back in office with Biden’s tenure as he works to frame 2026 midterm debates around inflation, investment and immigration.

At his Jan. 20, 2026 one‑year press conference, Trump repeatedly claimed "we have no inflation," said gas was "$1.99 in many states," touted $18 trillion in new investment pledges, argued one‑in‑four jobs added under Biden were government positions, and highlighted tough immigration enforcement using curated ICE images and mugshots. Fact checks show December CPI was up 2.7% year‑over‑year, the mid‑January national gas average was about $2.78 with no state averaging $1.99, the White House lists $9.6 trillion in pledges (experts call even that figure implausible), roughly 11% of jobs added were government jobs, and ICE data indicate about 74% of detainees had no criminal convictions while detailed deportation breakdowns are not published.

The White House is directing Fannie Mae and Freddie Mac to buy $200 billion in mortgage bonds as part of a broader effort by President Trump to use federal entities to enact housing policy without new legislation, a move that has prompted concern on Capitol Hill about stretching statutory authority. At the same time, Freddie Mac reports the average 30-year fixed rate has fallen to 6.06% — the lowest in more than three years — boosting purchase and refinance activity even as Attom data show affordability remains strained with record median prices and home-price gains far outpacing wages.

A new Bankrate analysis finds that more than three-quarters of homes currently on the U.S. market are unaffordable to a typical household earning about $80,000 a year, given today’s prices, a 6.8% 30‑year mortgage rate and a 20% down payment. Using a 30%‑of‑income cap for all-in housing costs (including taxes and insurance), the study concludes a buyer now needs roughly $113,000 in income to afford the $435,000 median‑priced home, a $33,000 gap from the median household. Only 11 of the 34 largest metros have at least 30% of listings within reach of middle‑income buyers, while in Miami, Los Angeles and San Diego fewer than 1 in 50 homes for sale were affordable as of July. By contrast, about half of listings in Pittsburgh and St. Louis, and roughly two in five in Baltimore, Detroit, Cincinnati and Birmingham, Alabama, were deemed affordable relative to local incomes, reflecting stronger new construction and better supply in some Southern and Rust Belt markets. Housing economists quoted in the report say that without a meaningful increase in supply where people want to live, affordability is unlikely to improve much even if mortgage rates ease, and note that builders are pivoting toward townhomes, which now make up about 18% of single‑family construction, as a more attainable option.

A new analysis of President Donald Trump’s second-term economic record finds that his sweeping tariff strategy has sharply raised U.S. trade taxes and narrowed the trade deficit but has not delivered either a recession or the promised manufacturing boom. The effective average tariff rate has climbed to 11.2% from 2.5%, helping drive tariff collections to $195 billion in the fiscal year ending Sept. 30, 2025—more than double the previous year—with current rates implying potential revenue of about $247 billion in 2026. Economists cited in the piece say all the tariff uncertainty is a drag on growth, with 2025 GDP expected to come in around 2%, while manufacturing employment has actually fallen and many headline‑grabbing factory announcements are years from fruition or may never materialize. So far, higher import prices have not produced a fresh inflation spike, in part because firms stockpiled goods before levies hit and some have secured exemptions, but analysts warn the full price impact may yet filter through. At the same time, a strong stock market and still‑elevated home prices have widened an affordability gap: only 21% of 2025 homebuyers were first‑timers, the lowest share since at least 1981, setting up affordability as a central political fight heading into the rest of Trump’s term.

President Trump on Dec. 31, 2025 signed a presidential proclamation delaying for one year planned tariff hikes that would have raised tariffs on upholstered furniture from the current 25% to 30% and on kitchen cabinets and vanities from 25% to 50% (the higher rates had been scheduled to take effect Jan. 1, 2026), leaving the September-imposed 25% tariffs in place. The White House framed the move as part of a "laser-focused" affordability push and ongoing trade talks — after recently rolling back some food tariffs — while economists warn such levies have pushed up consumer prices (household furnishings +4.6% year-over-year) and strategists say delays give the administration flexibility to ease costs for voters.

New nationwide court data compiled by Epiq AACER show U.S. consumer bankruptcy filings climbed 12% in 2025, from 478,752 cases in 2024 to 533,949, while commercial bankruptcies rose 5%, signaling mounting financial strain on households and businesses despite cooling headline inflation. Experts tell CBS News that higher medical insurance costs, growing credit‑card balances, the restart of student‑loan payments and still‑elevated interest rates are key drivers, with many families delaying bankruptcy until they are buried in bills. Chapter 11 business filings ticked up 1%, reflecting the squeeze of 2023–24 rate hikes and inflation, and recent high‑profile cases include Saks Global, whose Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman stores are expected to stay open under restructuring. Analysts stress that filings remain below pre‑COVID levels and largely represent a normalization after pandemic‑era relief, but they warn the upward trend that began in 2022 could accelerate through this year and into next as temporary buffers vanish. The pattern reinforces broader polling that most Americans still struggle with basic costs like housing, food and health care, even as official inflation readings improve.