How Trump’s second term has affected Americans financially
Since Donald Trump began his second term on January 20, 2025, the key financial question has been whether Americans’ paychecks have kept up with the cost of living—and how much federal policy has contributed to the changes.
For ordinary households, the biggest areas to examine are groceries, housing, energy, health insurance, tariffs, taxes, and government assistance.
It’s important to separate three things: costs that have actually increased, policies that may have pushed costs higher, and economic problems that began before Trump returned to office.
1. Tariffs have raised the cost of everyday goods
Trump’s tariffs tax imported goods. Although foreign exporters and businesses may absorb some of the cost, American consumers are paying more.
A Federal Reserve study published in 2026 found that tariffs introduced in 2025 raised prices for goods more exposed to those tariffs. Its estimates indicated that core goods prices were 3.1% higher through February 2026 than they otherwise would have been under the study’s comparison
This can affect Americans buying:
- Clothing and shoes
- Electronics and household appliances
- Furniture and other imported household goods
- Products made in America using imported materials
Who bears the burden? Lower-income households can be hit harder relative to their income because they have less financial flexibility to absorb higher prices. Federal Reserve researchers found a disproportionate welfare burden from the 2025 tariffs on lower-income households.
2. Americans’ paychecks have struggled to keep up with prices
According to the Bureau of Labor Statistics, from January 2025 through September 2026, average hourly wages and consumer prices both rose by approximately 3.4%. That amounts to essentially no gain in average purchasing power from hourly wage growth over that period. In September 2026 alone, inflation-adjusted average hourly earnings fell 0.7% from a year earlier.
January 2025 to September 2026
Consumer prices up +5.4%
Source: BLS data reported October 14, 2026. These are national averages, not individual household results.
That matters because people can receive a raise and still feel no better off. Their pay buys roughly the same amount, while their rent, insurance, debt payments, or other personal expenses may rise faster.
3. Gasoline and energy costs have increased sharply
The September 2026 consumer price report showed:
- Gasoline prices were up 34.2% from a year earlier.
- Overall energy prices were up 20.4%.
- Electricity prices were up 4.4%.
- Overall consumer inflation was 3.7%.
The recent spike in fuel prices has been linked in part to conflict involving Iran and disruptions to global oil supplies. Those are not solely domestic policy decisions, although military and foreign-policy decisions can influence the risks and disruptions that affect energy markets.
Higher fuel costs also affect trucking, shipping, air travel, and the cost of delivering goods. That can put additional pressure on household budgets beyond the gas station.
4. Health insurance costs and government assistance have become a concern
Health care is one of the biggest risks to household finances because insurance premiums, deductibles, and prescription costs can consume money needed for food and bills.
A report published October 8, 2026, by the Institute on Taxation and Economic Policy (ITEP) estimated that the expiration of enhanced Affordable Care Act premium tax credits, together with other Trump-era tax and price changes, left most income groups financially worse off overall in 2026. ITEP estimated an average additional burden of about $1,700 for the middle 20% of households and about $750 for the poorest 20%. These are estimates from a policy research organization, not direct measurements of every family’s actual expenses.
For affected families, higher insurance premiums can mean choosing between keeping comprehensive coverage and paying other bills.
5. Tax cuts have not benefited all Americans equally
Trump signed the One Big Beautiful Bill Act in July 2025. Its tax provisions changed what different households owe, while other provisions affected federal spending and health care assistance.
ITEP’s October 2026 analysis concluded that the combined effects of the tax changes, health insurance subsidy changes, and higher-than-expected prices increased the net financial burden for most income groups, while the richest 1% benefited overall.
That conclusion depends on the assumptions and policies included in ITEP’s analysis. Individual results vary: some taxpayers receive tax reductions, and the size of any benefit depends on income, family circumstances, and eligibility.
What is the fairest overall assessment?
Evidence available as of October 18, 2026
| Financial issue | What the evidence indicates |
|---|---|
| Tariffs | Federal Reserve research finds that they raised prices on affected goods. |
| Purchasing power | Average wage growth has roughly matched inflation since January 2025, leaving little average real hourly wage growth. |
| Energy | The latest data show a substantial year-over-year increase in gasoline and overall energy prices. |
| Health insurance | The expiration of enhanced subsidies has created additional costs for some people buying ACA marketplace coverage. |
| Taxes | The effects differ by income and household circumstances; policy analysts disagree about how to measure the full distributional impact. |
My conclusion from the available evidence: There are documented ways Trump’s policies have added to financial pressure, especially through tariffs and changes to health insurance assistance. At the same time, global energy shocks, longstanding housing costs, and other economic conditions also affect affordability. It would be inaccurate to attribute every increase in the cost of living to the president.
The central financial test is whether ordinary families have more money left after necessities. When wages fail to outpace those expenses, people can be worse off even if the economy is growing or some taxes are falling.
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