The first 18 months of President Donald Trump’s second term have been marked by sweeping policy changes, including tougher immigration enforcement, higher import tariffs and a military conflict with Iran, but key economic promises made during his 2024 campaign remain largely unfulfilled ahead of November’s midterm elections.

Although the US economy has proven more resilient than many economists expected, Trump has yet to deliver on pledges to lower consumer prices, revive manufacturing employment and improve living standards for middle-class Americans.

His administration’s immigration crackdown and expanded deportation efforts, coupled with higher tariffs on imports, have reshaped parts of the economy. However, the broader economic impact has fallen short of the rapid expansion Trump had promised, while the US-Israeli conflict with Iran has added fresh inflationary and supply chain risks through higher global oil prices.

According to revised data from the Bureau of Labor Statistics (BLS), both the US labour force and overall employment have declined since Trump returned to office in January 2025. The figures reflect reduced immigration and increased deportations, alongside an ageing population that has left fewer workers available to fill jobs across the economy.

Although changes to population estimates introduced in early 2026 make the agency’s standard employment data difficult to compare year-on-year, an experimental five-year dataset produced by the BLS similarly shows declines in workforce participation and employment during Trump’s second term.

Trump had argued that his economic policies would trigger a resurgence in US manufacturing. While business investment has increased significantly, much of the spending has been directed towards artificial intelligence (AI) data centres rather than factories.

The AI investment boom has boosted construction employment, but payroll data shows manufacturing employment remains below levels recorded at the end of former President Joe Biden’s administration in January 2025.

Some of Trump’s policy priorities are evident in employment figures, including a reduction in the federal workforce. However, economists note that structural factors continue to shape hiring patterns, with consumer demand supporting service industries such as hospitality while an ageing population continues to increase demand for healthcare workers.

Inflation, one of the defining issues of the 2024 presidential election, also remains above the Federal Reserve’s 2% target despite easing from pandemic-era highs.

Economists say Trump’s promise to lower prices outright was always unlikely, noting that broad declines in consumer prices typically occur only during severe economic downturns.

Instead, progress in reducing inflation has slowed. Import tariffs have contributed to higher costs, while oil prices climbed to around $100 per barrel following the outbreak of the Middle East conflict in late February, adding further inflationary pressure. Growing electricity and infrastructure demands linked to the AI investment boom have also added to rising costs.

Federal Reserve policymakers have warned that persistent price increases across multiple sectors could lead to broader inflationary pressures if left unchecked.

Despite these headwinds, consumer spending has remained relatively strong throughout Trump’s second term. However, economists warn that spending could weaken as inflation-adjusted disposable personal income—the amount households have left after taxes and government transfers—has stagnated and recently declined.

Affordability remains a major concern, particularly in the housing market.

Trump has shifted his rhetoric on housing in recent months, recently dismissing congressional legislation aimed at improving home affordability as “a big yawn” and declining to sign the measure.

Housing affordability continues to be constrained by elevated mortgage rates, higher home prices and rising insurance costs, trends that began during the COVID-19 pandemic and intensified after the Federal Reserve raised interest rates to combat inflation.

Economists note that while the federal government can encourage homebuilding through tax incentives, housing supply remains largely determined by local zoning and land-use regulations, limiting Washington’s ability to reduce costs.

Meanwhile, the US stock market has continued to perform strongly under Trump, with the president frequently pointing to record highs as evidence of the success of his economic agenda.

The benchmark S&P 500 has risen about 25% since Trump returned to office, broadly in line with the historical median gain recorded during the first 18 months of presidential terms dating back to Ronald Reagan.

Analysts attribute much of the market’s gains to investor enthusiasm surrounding artificial intelligence rather than government policy alone.

AI has also fuelled record levels of corporate borrowing. Corporate bond issuance reached $1.52 trillion by the end of June, surpassing the post-pandemic boom in 2020, with much of the financing directed towards AI-related investments.

Economists say the robust corporate bond market, together with strong investor demand and healthy corporate balance sheets, suggests the US economy remains fundamentally resilient despite slowing income growth, persistent inflation and continued uncertainty over the longer-term impact of Trump’s economic policies. (Arise News)

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