Voters to Assess Trump Based on Economic Performance
As the midterm elections approach, voters are set to assess Trump based on economic performance, with the cost of living playing a crucial role in their judgment. The ongoing US-Israeli conflict in Iran, now in its third month, has triggered a global energy shock reminiscent of the 1970s oil crises. This has driven up prices for fuel and groceries, adding pressure on American consumers.
Economic Growth Amid Rising Costs
Despite these challenges, the US economy showed resilience in the first quarter of 2026. Official statistics revealed a 2% annualised growth rate, marking a recovery after a slowdown at the end of 2025. Consumer spending grew by 1.6% annually, which was better than expected given the pressures from tariffs and the energy shock.
Economists attribute much of this growth to significant investments by technology companies, particularly in artificial intelligence (AI). James Knightley, chief international economist at ING, noted that as consumer spending slows, tech and AI investments have become the main drivers of US economic growth.
Inflation and Interest Rates Impact Voter Sentiment
However, the rising cost of living remains a major concern for voters. The conflict in Iran has pushed oil prices sharply higher, with Brent crude reaching $126 per barrel before falling back to $111. This increase led to fuel prices rising to $4.30 per gallon by the end of April, up from less than $3 in February.
Inflation also surged, with March’s annual price increase hitting 3.3%, a near two-year high and a significant rise from February’s 2.4%. This inflation spike has influenced the Federal Reserve’s decision to maintain interest rates between 3.5% and 3.75%, delaying anticipated rate cuts.
Mortgage rates have risen as well, with the average 30-year mortgage rate increasing from 5.98% to 6.3% since the conflict began. Economists suggest that sustained high oil prices and ongoing US actions in Iran could postpone interest rate reductions until 2027.
Stock Market Performance and Political Implications
Despite economic uncertainties, the stock market has performed well. Major indices such as the Nasdaq, S&P 500, and Dow Jones Industrial Average have recovered early losses and continued to rise during the conflict. This growth benefits investors and those with retirement accounts linked to the stock market.
With Republicans facing potential losses in both the House and Senate, the state of the economy will be a decisive factor in the November elections. While positive GDP growth and strong stock markets may support Republican strategies, the rising cost of living remains a significant challenge.
Ultimately, how much Donald Trump can achieve in his remaining time as president will depend heavily on the resolution of the Iran conflict, the reopening of the Strait of Hormuz, and whether these developments lead to lower fuel and grocery prices for American voters.