The U.S. economy withstood the first 18 months of President Donald Trump's second term more effectively than many economists expected despite higher tariffs, tighter immigration enforcement and the conflict with Iran. However, progress toward Trump's promises of lower prices, increased manufacturing employment and stronger conditions for middle-income households remained limited ahead of the midterm elections. A Bureau of Labor Statistics experimental data series showed that both the labor force and the number of employed people declined after Trump returned to office. Immigration restrictions, deportations and the aging U.S. population have reduced the number of workers available for employers.
Investment in artificial-intelligence data centers has increased construction employment, but payroll reports showed fewer manufacturing jobs than when former President Joe Biden left office in January 2025. Inflation also remained above the Federal Reserve's 2% objective, with progress toward lower price growth appearing to stall. Tariffs contributed to some price increases, while oil's rise to approximately $100 per barrel placed additional pressure on inflation. AI infrastructure development has also increased demand for equipment, energy and other resources. Consumer spending remained resilient, although inflation-adjusted disposable personal income, a broad measure of household purchasing power after taxes, recently stopped growing and declined during some periods.
The S&P 500 (SPY) gained approximately 25% during Trump's second term, compared with a median first-18-month increase of about 24% for presidential terms beginning with Ronald Reagan. Artificial intelligence was a major contributor to the market increase and represented the largest driver of the business-investment expansion supporting gross domestic product growth. Corporate bond issuance reached $1.52 trillion through June, putting 2026 on a record pace as companies raised substantial financing for AI investment. Strong demand and narrow credit spreads indicated resilient corporate balance sheets, although housing affordability, elevated mortgage rates and insurance expenses continued placing pressure on households. Investors may view the economy as resilient, but employment, inflation and household-income data suggest that the benefits remain uneven.