Donald Trump enters the midterm campaign season facing a challenge few in his party expected. After returning to office with the promise of restoring economic stability, he is now confronted with data showing a deepening divide between the richest Americans and those struggling with higher prices and weakening job prospects. What once served as his strongest argument to voters has become a point of vulnerability, exposing a K-shaped economy in which the fortunes of the top and bottom no longer move in tandem. Recent analysis from the Atlanta Federal Reserve shows wage growth slowing most sharply for lower-income Americans, erasing progress made during the previous decade. Economists warn that this group is now bearing the brunt of a cooling jobs market, even as financial markets and corporate profits remain buoyant, the Financial Times reported.
A crisis of affordability cuts across communities
Although inflation has eased from its post-pandemic peak, the lived experience for many households remains harsh. Essential expenses such as groceries, childcare, rent and transport continue to outpace wage gains for millions. Consumer sentiment surveys capture this split clearly. Those without investment portfolios are reporting confidence levels similar to the worst period of the 2022 inflation spike, while households with significant stock holdings have grown more optimistic. The divide is particularly evident among Hispanic voters, who swung toward Trump in 2024 but have since faced a rise in unemployment and falling real wages. Their discontent underscores a broader political risk: the administration’s message of economic turnaround is not matching the realities that many communities face.
Corporate earnings reveal the strain on lower-income consumers
Recent earnings calls reveal how sharply spending behaviour has changed. Major restaurant chains report declining traffic from lower-income households, a trend that has persisted for nearly two years. Executives point to rising rent, childcare and food costs as pressures that have forced these consumers to cut back on even modest discretionary purchases. The pattern is repeated across several consumer-facing sectors, where companies note a marked pullback from families earning under $100,000 a year. The strain is reshaping business forecasts and adding weight to concerns that the U.S. economy is entering a period of uneven resilience: the top continues to spend while the bottom contracts.
A political test for Trump as midterms approach
The administration has struggled to convince voters that its economic policies are easing the affordability crunch. Trump has dismissed the issue as exaggerated, yet his own advisers recognise that anxiety over rising costs has become a defining concern. Republicans underperformed in several off-year elections where opponents campaigned heavily on the cost of living, signalling that the issue could shape next year’s congressional races. The White House has tried to counter the narrative by cutting tariffs on agricultural imports to lower grocery prices and proposing new measures to support household budgets. But these steps come as voters grow impatient for tangible relief.
The governing challenge of unequal growth
The administration’s signature legislative package, passed earlier in the year, is set to take effect in 2026 and has become another point of contention. It extends tax cuts but also reduces support for programmes such as Medicaid and food benefits. Budget analysts estimate that the changes will reduce resources for the lowest-income households while significantly boosting the finances of the top tier. Economists caution that these pressures will deepen over the next year as healthcare subsidies shift, leaving many working- and middle-class Americans facing rising costs even in an economy that continues to grow at the aggregate level.
An economy that forces a political reckoning
The widening gap between those benefiting from the AI-driven investment boom and those weighed down by persistent inflation has left the president with a complex story to sell. Even as stock indices climb, the sense of financial strain among millions of Americans is intensifying. The administration argues that deregulation, reshoring policies and tax incentives will eventually narrow the divide. For many households, however, the immediate picture is stark: wages lag, savings erode and prices feel unrelenting. As the midterms draw closer, Trump must persuade voters that he can bridge this divide at a time when the economy tells a more complicated story.
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