Kevin Hassett, director of the National Economic Council, has a message for US voters ahead of next week's midterm elections: This is "about the best economy we've ever seen." Sure, according to Hassett, there are "pockets that need some repairs," but the expected almost 4% GDP growth in the third quarter can offset these challenges. It is similar to President Donald Trump's "I don't give a damn. We're making a freaking fortune" message at a campaign rally this weekend.
So, is this truly the best economy America has ever witnessed?
Inside the ‘Best Economy’
If armchair economists were to craft a dashboard for the United States that every person can understand, it would look like this:
- Gross Domestic Product
- Annual Consumer Inflation
- Unemployment Rate
- Average Hourly Wages
- 10-Year Treasury Bond Yield
Suffice it to say, these headline numbers have not been exceptional. Or, at the very least, they don't match the glowing economic conditions the administration espouses.
When President Trump returned to 1600 Pennsylvania Ave. for a second term, he inherited an annual inflation rate of 3%. Today, the Bureau of Labor Statistics' Consumer Price Index reports a 12-month headline rate of 3.7%. Core inflation, which strips out the volatile energy and food categories, is better, easing from 3.3% to 2.6%.
This past summer, the president said US GDP growth could be "10, 12, or 15" times higher if not for the Federal Reserve. Growth has fluctuated under the current administration, averaging a little more than 2% since the first quarter of 2025, below his predecessor's 3.2% in the final six quarters of his tenure. The difference, however, is that the incumbent's record has been largely driven by the private sector.
Despite chaos in the broader economy, the US unemployment rate has been the one constant that helps keep employed people asleep at night. It has stayed near a historically low 4% despite tariffs, war, public-sector layoffs, shutdowns, and other economic headwinds. Part of that is because fewer people are in the labor force (less immigration and more retirements). Some of that is because firms are monitoring the situation.
Real (inflation-adjusted) family income is up under Trump, but elevated inflation has slowly chipped away at these gains. Real average hourly and weekly wages have turned negative in recent months, resulting from the war in Iran. This explains why everyone hates inflation, whether it is 1.9% or 9.1%.
Last, interest rates have been at the center of MAGA World since the August-September spike. Benchmark 10- and 30-year Treasury yields have accelerated to their highest levels since before the Global Financial Crisis. But the entire yield curve rocketed, putting pressure across credit markets, from mortgages to auto loans, and affecting businesses and consumers.
Need the AI
Above-ground data points suggest consumers are holding steady and business investment is strong. A deeper dive, however, indicates a more cautious shopper and companies struggling to attract capital in a tough environment.
That said, the artificial intelligence (AI) boom is driving current economic conditions, whether building data centers or producing chips. Without this new technology, the US economy might grow by barely 1% per quarter.
Nvidia CEO Jensen Huang warned in a recent CNBC interview that AI demand is robust, but gathering the cash needed has been more challenging: “What is missing in the middle is the working capital to fuel that growth because there’s just so much demand across so many sectors of AI, there’s a scarcity of capital,” Huang said. “The demand of the capital is much greater than the availability of the capital. That’s going to get solved.”
This is why President Trump is putting all his eggs in the AI basket.
Voters Are Unhappy
The University of Michigan’s October Consumer Sentiment Index revealed something that might not bode well for the GOP. The widely watched survey produced the second-lowest reading on record, but it also showed that Republicans are more frustrated with the economy than Democrats and independents, mainly because of cost-of-living issues.
With one week to go, Liberty Nation News' Public Square polling data show Democrats with an eight-point edge. Prediction markets suggest a blue wave will absorb the House and Senate. This could set the stage for Democrats retaking the White House in 2028. The Iranian conflict, which sparked a bombardment of economic risks, will likely be seen as the driver behind the Democratic Party's resurgence.
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