Trump's economy at 18 months: Mixed picture
The first 18 months of President Donald Trump's second term in the White House have seen a series of policy-driven economic shocks, highlighted by the
The first 18 months of President Donald Trump's second term in the White House have seen a series of policy-driven economic shocks, highlighted by the immigration crackdown and higher tariffs that he promised during his 2024 campaign, and an unanticipated war with Iran that has boosted the price of oil and threatened global supply chains. While the U.S. economy overall has withstood the policy changes and Middle East war better than many economists expected, Trump's vow to lower prices, boost factory jobs, and improve life for the middle class has yet to materialize, with the midterm elections a little more than three months away. Resilient, yes, but the economy has also stalled in many of the areas where Trump said that mass deportations of undocumented people and higher import taxes would trigger a boom, with the U.S.-Israeli war against Iran intensifying some key risks.JobsThe broadest measure of employment comes from the Bureau of Labor Statistics' household survey. Changes in population statistics in early 2026 mean BLS's published data is not strictly comparable from year to year, showing a sharp drop in employment and the number of people looking for jobs in January largely due to the new controls. But the agency does use the new population estimates for an experimental series that looks back five years to create a consistent data set beginning in April 2020. That data also shows declines in both the labor force and number of people working since Trump's return to office, a logical development given the efforts to limit immigration and increase deportations. Coupled with an aging native population, fewer people are available to fill jobs.Read More: Trump’s new tariffs prompt lawsuit from small businessesWho's hiringTrump said his policies would lead to a U.S. manufacturing revival, with jobs to follow.
There has been an investment boom - in artificial intelligence data centers whose impact on output and jobs remains to be seen. The AI investment has pushed construction employment higher. But payroll reports show fewer manufacturing jobs than at the end of former President Joe Biden's administration. Biden left the presidency in January 2025. Some of Trump's priorities are reflected in the jobs data, such as the drop in the number of government workers. But it's hard to reshape what an economy of 342 million people demands. It's a society that likes restaurants and bars. And it's one that is getting older and in need of more healthcare services. Changes in hiring reflect that dynamic.Prices Inflation was a major campaign theme in 2024, with anger over the COVID-19 pandemic price shock still fresh even as price pressures eased while the Federal Reserve raised interest rates.But Trump's promise to lower prices was never realistic. Historically, U.S. prices on a broad basis only fall during dire economic times. Lowering inflation is possible, but any improvement under Trump has been modest. The most closely watched price indexes show progress stalling, with inflation still above the Fed's 2% target, and policymakers concerned about the risks of it moving higher. Import tariffs added to the price hikes to some degree; oil's surge to around $100 a barrel, about 50% more than where it traded before the war in the Middle East began in late February, added to the pressure; and now the demands from the AI buildout are doing the same.Read More: Americans rewire their grocery shopping routines while digesting the biggest price jump in 50 yearsEconomists expect relative price shifts. In any given period, certain goods will increase relative to others.But when the increases are big and broad enough, and different items keep rotating through the price-increase cycle, the result is more generalized inflation.
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