Just before the election in 2024, he told voters they were days away from “the best jobs, the biggest paychecks, and the brightest economic future the world has ever seen. ALL POPULISTS promise much to the working man, but Donald Trump predicted a golden age. His unorthodox blend of tariffs, tax cuts and deportations, he claimed, would bring down living costs, revive America’s industrial heartland and restore middle-class prosperity.
To tally the net effects of these gains and losses, The Economist combined estimates of the impact of tariffs, higher petrol prices and Mr Trump’s tax-and-spending law across income groups in 2026. We estimate that Mr Trump’s policies will cost the poorest tenth of American households, with average income after taxes and transfers of around $37,000, almost 3% of their income.The richest tenth, with average after-tax incomes of nearly $500,000, will gain nearly 3% (see chart 1). Households in the middle, with average income of roughly $100,000, lose more than $400. That has raised average premiums for individual insurance purchased on exchanges by nearly $800 a year, according to KFF, a health-policy research group. Americans invested in the stock market have more to celebrate, as the AI bonanza has driven up the value of the S&P 500. Of the $17trn increase in Americans’ equity and mutual-fund wealth since the end of 2024, nearly 90% accrued to the richest tenth of households, compared with just 0.6% for the poorer half, according to data from the Federal Reserve (see chart 2).
But the impact is, once again, lopsided.
That does not account for the effect of a decision, taken by Congressional Republicans last year and endorsed by Mr Trump, to let enhanced Obamacare subsidies expire.
When it comes to jobs, health care and social assistance have accounted for almost all private-sector gains since January 2025, to meet demand from America’s ageing population. The AI boom has been another bright spot, with data-centre investment creating roughly 180,000 new jobs in industries related to the build-out. Annual wage growth across the private sector has slowed from 4% to 3%; rising inflation means that workers’ hourly pay is 0.7% lower in real terms than a year ago. Labour’s share of nonfarm business output has fallen to its lowest level since records began in 1947 (technical changes to how business owners’ earnings are classified explain only some of the decline). Though manufacturing output has risen, manufacturing employment has fallen by some 20,000 since January 2025, while factory workers’ wages have failed to keep pace with inflation over the past year. In North Carolina, which Mr Trump won in 2024 and which now looks set to elect a Democrat to the Senate, nearly 9,000 factory jobs have disappeared over the past year.
In other sectors, though, private employment has barely budged. A renaissance in manufacturing jobs has been particularly elusive.
Mortgage rates, pushed up in part by the inflationary effects of his war in Iran, have climbed above 7%, prompting existing owners to stay put. Last year builders estimated that tariffs on materials would add nearly $11,000 to the cost of a typical new home. His immigration crackdown is fuelling labour shortages, too; in September a survey from the National Association of Home Builders reported that labour costs were up by 4.2% from a year earlier. In May sales of starter homes fell by 5.4% from a year earlier, even as luxury-home sales rose by 6.2%, according to Zillow, an online property firm.
Housing costs pose another problem for the president. Adding new supply has become more costly. It is lower-income and middle-class voters, again, who are most pinched.
