A week before the 3 November midterm elections, the US economy presents a mixed record. Inflation is 3.7% over the past 12 months, according to the last consumer price report before Election Day, and the unemployment rate is 4.2%. Employers have added an average of almost 39,000 jobs a month in President Donald Trump’s second term, while the S&P 500 is up about 12% this year, the Associated Press reported. The question is which of these numbers voters will weigh most heavily.
The case that the economy is holding up rests on growth, markets and employment. The economy is expanding a bit more than 2% a year, according to the AP, and the Federal Reserve’s September projections put 2026 real GDP growth at 2.3%. The S&P 500 is up about 12% this year after rising about 16.4% last year and 23.3% in 2024, before Trump took office. The unemployment rate of 4.2% has largely held steady, and the Fed projects it at 4.1% for 2026. The International Monetary Fund projects US growth of 2.3% in both 2026 and 2027, against 1.1% for the euro area and 0.7% for Japan in 2026.
The case that it is under strain rests on prices, jobs and borrowing costs. Inflation was rising about 3% when Trump returned to office in January 2025 and is now 3.7%, and the Iran war has pushed gasoline prices up; in a Washington Post/ABC/Ipsos poll, seven in 10 said gasoline is becoming unaffordable. Employers added an average of more than 121,000 jobs a month in the year before he returned, against about 39,000 now. The 10-year Treasury yield is above 5%, its highest level since 2002, and federal revenue from business taxes fell 16% last year, according to the Congressional Budget Office. The top 0.1% of households gained $5.5 trillion in about 18 months, while the bottom 50% gained $380 billion, an average of $5,600 for the bottom half against $40.8 million for the top 0.1%.
The numbers matter because the election is largely about the cost of living. The Fed raised its policy rate by a quarter point to 3.75% to 4% in September and projects inflation of 3.7% this year, so borrowing costs and prices are both elevated. A Reuters/Ipsos poll found Democrats at 40% and Republicans at 33% when voters were asked which party is better at managing the economy, and the governing party has lost House seats in 18 of the 20 midterms since 1946, according to University of California, Santa Barbara data. A Strength In Numbers/Verasight poll found 63% naming prices and inflation among their top three problems, and Trump’s approval stood at 31% in Reuters/Ipsos. The Fed’s next meeting on 27 and 28 October falls days before voters decide, and the average 30-year mortgage rate of 7.32% compares with 6.19% a year ago.
The Federal Reserve’s own projections put 2026 core PCE inflation at 3.4%, up from 3.3% in June, so price pressure is broad as well as energy-driven. The economy is growing, but unevenly, and the cost of living is voters’ leading concern. Which of those facts shapes the vote will be known on 3 November.