Voters Will Judge Trump on the Economy – How Is It Doing?

Voters will judge Trump on the economy – As the Iranian conflict enters its third month, the impact on the US economy has become a central issue in the upcoming midterm elections. Despite the war’s disruptions, recent economic data suggests that the nation’s financial health remains resilient. With the first quarter of 2026 marking a pivotal moment, voters are scrutinizing whether Trump’s policies have effectively steered the country through turbulent times.

GDP Growth and Consumer Spending

Official figures released this week revealed a 2% annualized GDP increase for the first three months of 2026, a significant rebound following the slowdown of late 2025. This growth was achieved despite the added strain on American consumers from Trump’s tariffs and the energy crisis triggered by the Iran conflict. Consumer spending, however, showed a more modest 1.6% annualized rise, indicating that while the overall economy is holding steady, the everyday costs for households are still a concern.

“Investment linked to tech and AI has clearly become the main engine of growth in the US,” said James Knightley, chief international economist at ING. His analysis underscores the shift in economic momentum, as sectors like technology and artificial intelligence (AI) have absorbed much of the pressure from global shocks.

Experts point to the surge in tech investments as a key driver of the current growth. Companies pouring billions into AI development have offset some of the drag from rising energy prices and supply chain disruptions. Yet, this does not fully alleviate the strain on average Americans, who continue to grapple with higher living expenses. The war’s ripple effects are evident in the escalating costs of fuel and groceries, forcing households to adjust their budgets.

Inflation and the Federal Reserve

The war has also contributed to a sharp uptick in inflation, with March’s average annual price increases reaching 3.3%, a near two-year high. This surge follows February’s 2.4% rate, highlighting the persistent challenge of stabilizing the cost of living. The Federal Reserve, tasked with managing inflation, has delayed interest rate cuts, keeping the base rate at 3.5% to 3.75%. Such a decision reflects concerns that the economic impact of the conflict could prolong inflationary pressures.

Higher oil prices, a direct consequence of the closure of the Strait of Hormuz, have played a critical role in this inflationary trend. Brent crude, a major oil benchmark, peaked at $126 on Thursday, a four-year high. While it has since dipped to $111, the war’s outbreak in February pushed prices from around $73 to the current level, resulting in a 40-cent rise for a gallon of fuel by April. This increase has directly affected American consumers, with many now facing higher expenses at the pump and in grocery stores.

Stock Market Resilience

Amid the turmoil, the US stock market has shown remarkable resilience. Major indices such as the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite have not only recovered from early losses but have continued their upward trajectory. The Nasdaq, for instance, has gained approximately 10% since the conflict began, while the S&P 500 is up about 5% and the Dow has risen by just over 1%. These gains are a boon for investors, particularly those with retirement accounts like 401(k)s, which are heavily tied to stock performance.

While the stock market’s strength offers a glimmer of hope, it contrasts with the struggles of everyday consumers. The discrepancy between corporate gains and household expenses highlights the uneven distribution of economic benefits. For many voters, the cost of living remains a more immediate priority than the stock market’s performance, especially as the midterms approach.

Political Implications

With the November elections on the horizon, the political stakes are high. The Republican Party’s success hinges largely on the economic narrative Trump and his allies can craft. The president is expected to leverage the positive GDP figures to reinforce his economic agenda, positioning it as a catalyst for growth. However, the rising cost of living could undermine this strategy, as voters are likely to focus on tangible impacts such as fuel and grocery prices.

Analysts suggest that the conflict in Iran will continue to influence the economy, with its resolution playing a decisive role in determining future economic outcomes. If the Strait of Hormuz remains closed, the pressure on energy prices could persist, further straining households. Conversely, a swift end to the conflict might lead to a decline in oil prices, easing the burden on consumers and potentially paving the way for interest rate cuts by the Federal Reserve.

Samuel Tombs, chief US economist at Pantheon Macroeconomics, noted that higher oil prices and the expectation of prolonged Iranian port blockades could delay rate cuts until 2027. “The war’s effects are still unfolding, and their long-term implications will shape the central bank’s decisions,” he added.

The upcoming elections will serve as a barometer for public sentiment toward Trump’s economic policies. While headline figures like GDP growth and stock market rebounds are positive, they may not be enough to counter the widespread anxiety over inflation and living costs. The Republican Party’s ability to retain control of the House and Senate will depend on whether the economy continues to outperform expectations or if the war’s costs begin to outweigh its benefits.

As the conflict in Iran shows no signs of abating, the economy’s trajectory remains a focal point for both political and economic discourse. The combination of global energy shocks, consumer spending trends, and investor confidence will determine how voters assess Trump’s legacy. With the stakes so high, the outcome of the midterms could either solidify his economic strategy or expose its vulnerabilities. The next few months will be critical in shaping the final verdict on his presidency’s economic performance.