In the nearly two years since President Donald Trump clinched his return to office, the U.S. economy has come under great duress, leaving families and businesses to suffer through the expensive consequences of constant global conflict and soaring government debt.

It was the financial frustration of a pandemic-weary electorate that helped to catapult Trump and his fellow Republicans to a rare supermajority in 2024, which they promised to use to defeat the scourge of inflation and slash the profligate government spending they saw as the root of the problem.

But Trump’s actions in office have complicated — if not undermined — those pledges. With two months until the midterms, some of his policies have prolonged or worsened the economic fortunes of those he promised to help.

It began with a punishing global trade war, which exacerbated the nation’s long quest to bring down the cost of living in the years following the pandemic. This week, the president escalated that offensive and took renewed aim at Canada, setting off a costly tariff tit-for-tat that could drive up prices for Americans.

Nor is the war with Iran anywhere close to complete. The seemingly intractable conflict, which reached the six-month mark Friday, has kept gas prices sky-high. And the costs of Trump’s ongoing military intervention have further exacerbated the nation’s fiscal woes, helping to send the debt soaring past $40 trillion. The development has roiled the bond market in ways that have implicated Americans’ finances, chiefly by making borrowing, including mortgages, more expensive.

The president still maintains that his administration has helped families and businesses, and righted the wrongs of his predecessor, President Joe Biden. But, as polls increasingly suggest, voters have tired of Trump’s appeals for patience as he enacts his full agenda. That appears poised to turn the midterms into a referendum on Trump’s credibility on the economy — a key source for his political rise.

Olu Sonola, the head of U.S. economics at Fitch Ratings, described the dynamic around persistently high prices in America as “death by a thousand cuts.”

He pointed to a confluence of factors, from war to tariffs, that have surfaced over the past year. Sonola said those developments had exacerbated inflation — and, importantly, shaded consumers’ expectations about the state of the economy.

“The drip, drip, drip — week in and week out, month in and month out — has an impact,” he said.

For Trump, the stakes are laid bare in a series of concerning economic snapshots released in recent weeks. That includes a key gauge of inflation, published Wednesday, which found that prices in July rose by 3.7% compared with a year earlier.

It was the same annualized rate as measured in June, illustrating that price pressures are stuck at a level well above the Federal Reserve’s target.

Not all is bad under Trump. The economy is growing, manufacturing is on the upswing and the labor market has remained steady. Those positives come amid a surge of new investments in artificial intelligence, one that has produced record days in financial markets and raised the odds of an economic boom as the technology truly takes hold.

But Gregory Daco, the chief economist at EY-Parthenon, said some of the data nonetheless illustrated the “economy that could have been.” In a research note this week, he said the United States might have seen more robust growth and other improvements if not for a set of recent shocks that were “policy driven.”

One of those shocks arrived last Saturday, when Trump officially slapped new tariffs on a subset of imports from Canada, then threatened additional, steep duties on the country’s auto industry. As Canada moved later to retaliate, the spat recalled the frenetic opening days of Trump’s global trade war that roiled allies and adversaries alike.

Tariffs are taxes on imports, so much as before, the president’s actions appeared primed to hammer American shoppers who buy Canadian goods. In one estimate, the nonpartisan Yale Budget Lab projected this month that households would face, on average, about $1,100 in additional annual costs from Trump’s updated slate of duties. But, when asked Thursday about the potential for price increases, Trump claimed that his tariffs on Canada would be “very good for us.”

Sarah House, a senior economist with Wells Fargo, ultimately projected that inflation could end the year around 3.5%. That would be well above what some experts had originally anticipated at the start of 2026, she said, before a confluence of factors — from the rise of AI to policy decisions in the nation’s capital — upended the rosier forecasts.

“There’s this big gap between what consumers are taking in” and “how fast money is going out the door,” House explained.

In a statement, Christopher Phelan, the new chair of the White House Council of Economic Advisers, maintained that long-term expectations around inflation “have remained tempered and unchanged since the beginning of the administration.”

But the uncertainty stemming from Trump’s policies has complicated matters for the Fed, where policymakers have grown restive about inflation but have held back on raising rates to tame it — at least for now.

“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Kevin Warsh, the chair of the Fed, said during a speech Friday in Jackson, Wyoming. “Otherwise, we have work to do.”

For Trump, there’s much at stake in the Fed’s decision. As he browbeats the board on monetary policy, the president has also spoken openly about his desire to see borrowing costs lowered so that it is cheaper for the government itself to borrow.

Those demands have come against the backdrop of an ominous milestone: the national debt’s surpassing $40 trillion, further outpacing the country’s total economic output in a given year. The yawning gap underscored just how little Trump and his Republican allies have managed to cut spending, despite promising austerity to voters two years ago.

“It’s all talk,” said Jessica Riedl, a budget and tax fellow at the Brookings Institution and former aide to a Republican senator.

Riedl recalled Trump’s promises to eliminate the debt entirely, a goal many saw as unrealistic. Instead, the fiscal imbalance has worsened, as has the cost of servicing the debt, which now ranks among the government’s largest expenses.

“Republicans always say, ‘Give us control of government, and we’ll slash spending,’” Riedl added. “They have control of government, and they have no excuse left.”

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This article originally appeared in The New York Times.

By Tony Romm/Emily Elconin

c.2026 The New York Times Company