U.S. Economy Under Scrutiny Ahead of Midterms: Data Shows

Voters Question the Economy Ahead of November Midterms

With midterm elections approaching on November 3, 2026, voter sentiment regarding the U.S. economy has shifted significantly, according to polling data cited by The Washington Post. For the first time in over a decade, polls indicate that voters trust Democrats more than Republicans on economic issues, even as President Donald Trump’s administration points to steady overall growth and a resilient stock market.

Economic Growth Continues at a Stable Pace

The U.S. economy is currently expanding at a stable annual rate of 2.2 percent, supported by strong consumer spending and strong business investment, The Washington Post reported. Business investment has been heavily bolstered by the artificial intelligence boom and extensive data center construction. While overall growth slowed slightly in the second quarter, economic output remains steady and comparable to levels seen under President Joe Biden once pandemic-era fluctuations evened out. Third-quarter figures, which will capture the ongoing economic impacts of the conflict in Iran, are scheduled for release ahead of the November 3 election.

Stock Market Reaches New Highs While Wages Lag

The S&P 500 index hit a new record earlier in October 2026, driven largely by massive corporate spending on artificial intelligence infrastructure. However, economists emphasize that the benefits of this market surge are concentrated among wealthier households. Mark Zandi, chief economist at Moody’s Analytics, noted that high-income earners holding AI stocks are thriving, whereas the bottom 80 percent of income earners own minimal stock and face declining after-inflation wages. Data from the Bureau of Labor Statistics shows that average hourly pay and consumer prices have both risen by about 5.4 percent between January 2025 and September 2026, leaving average workers with zero real wage growth.

Federal Debt and Treasury Yields Climb

The federal debt reached $40 trillion in August 2026, accelerating faster than anticipated due to lost revenue from invalidated tariffs, a major tax cut law signed the prior year, and billions in new spending for immigration enforcement and military operations in Iran. Debt held by the public stood at 98.7 percent of the overall economy in the first quarter of 2026, approaching post-World War II peaks. This rapid accumulation, combined with global inflation and geopolitical tensions, has pushed the benchmark 10-year Treasury yield above 5 percent. In the fiscal year ending in September 2026, the government paid over $1 trillion in interest on the debt, accounting for 14 percent of total federal spending.

Inflation Rebounds Following Conflict in Iran

Inflation had declined to 2.3 percent by April 2025 after peaking at a 40-year high of 9.1 percent in June 2022, The Guardian reported. However, following the U.S. and Israeli invasion of Iran in February 2025, inflation rebounded to an annual rate of 3.7 percent by September 2026, driven primarily by soaring energy costs. While President Trump campaigned on lowering consumer prices and highlighted recent drops in the cost of eggs and prescription drugs, persistent inflation remains a central voter concern. Gasoline prices have surged roughly 37 percent since Trump took office, and diesel prices hit a record $6.50 per gallon in September 2026, heavily impacting agricultural and trucking costs.

Mortgage Rates and Housing Market Pressures

Rates for a 30-year fixed home loan climbed to 7.4 percent in October 2026, the highest level in three years. Although mortgage rates briefly dipped below 6 percent in February 2025, surging Treasury yields and rising inflation reversed the downward trend. In response to persistent inflation, the Federal Reserve raised interest rates in September 2026 for the first time in over three years, a quarter-point hike announced by Fed Chair Kevin Warsh, according to reporting by The Guardian. These elevated borrowing costs have compounded affordability challenges for prospective homebuyers.

Labor Market Maintains Low Hiring and Low Layoffs

The national labor market remains in a low-hire, low-fire equilibrium. While overall hiring has stagnated outside of health care, initial claims for unemployment benefits have hovered at or below 200,000 for six consecutive weeks, marking the longest such stretch since the late 1960s. Bill Adams, chief U.S. economist at Fifth Third Commercial Bank, observed that while job seekers face a difficult environment, currently employed workers enjoy strong job security. Steady employment levels, combined with demographic trends like retiring baby boomers and new work restrictions for immigrants, have kept the unemployment rate stable throughout Trump’s second term.

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