As the United States prepares for midterm congressional elections, the performance of the US economy remains a polarizing subject. President Donald Trump has touted a "golden age" of growth and job creation, yet rising consumer prices and massive federal deficits are fueling voter anxiety.

Is the US economy growing?

Recent data suggests the economy is expanding at an annualized rate of 2.2%. This growth has been bolstered by several key factors:

  • Significant capital investment in artificial intelligence and data center construction.
  • Robust retail sales and high industrial output.
  • Low rates of unemployment benefit filings.

Despite these strengths, the administration faces criticism regarding fiscal management. The federal deficit for the fiscal year ending September 30 reached approximately $2 trillion, marking the third largest in history. This deficit was 12% larger than the previous year, driven by high entitlement payments, tax cuts, and increased military spending.

Why is inflation still a concern?

Although inflation is lower than the 9% peak seen in 2022, it has risen to 3.7%. This rate is higher than the 3% level the administration inherited in early 2025. Economists suggest that new trade tariffs and energy price fluctuations resulting from conflict with Iran have contributed to these rising costs.

For many households, the impact is direct. Consumer prices have outpaced wage growth for six consecutive months, and national gasoline prices have remained above $4 per gallon for most of the last half-year. This disconnect between macroeconomic growth and daily affordability is a primary driver of negative consumer sentiment.

What are the long-term risks?

Beyond immediate price hikes, the nation's debt has hit a milestone of $40 trillion. While US credit quality remains stable for now, the government's high borrowing costs—totaling a record $1.36 trillion in debt service—pose a long-term challenge. High interest rates are already impacting the cost of home mortgages and consumer loans.

For neighbors in Canada, these shifts are closely watched. Economic fluctuations in the US act as "transmission belts" that impact North American energy, automotive, and food sectors. A shock that begins in Washington often arrives in Canadian factories and markets shortly after.

FAQ

How much is the US national debt?

As of August 2026, the United States government debt reached $40 trillion.

What is driving current inflation?

Economists point to the impact of trade tariffs and rising energy prices as factors that have prevented inflation from falling below 3%.