Trump Administration Navigates Economic Landscape Amid Affordability Concerns and Policy Debates

President Donald Trump's administration has focused on addressing consumer affordability, introducing various economic proposals and responding to reported price changes across key sectors. This report synthesizes data on grocery, electricity, and car prices, outlines the administration's policy initiatives, and presents economic analyses and public perceptions of the current economic environment.

Economic Context and Administration Focus

President Trump's campaign pledges included addressing inflation and reducing the cost of living for Americans. He stated intentions to "immediately bring prices down, starting on Day One" and to "make America affordable again." The administration has characterized initial affordability concerns as a "Democratic 'hoax'" or partisan tactic, while also acknowledging economic challenges. Administration officials often attribute current economic conditions to policies of the preceding Biden administration and the Federal Reserve, specifically high interest rates. President Trump has consistently given the economy an "A+++++" grade.

Public opinion surveys indicate a mixed landscape. While a Reuters/Ipsos poll showed a three-point increase in Trump's approval rating to 41%, other polls from Harvard CAPS/Harris and AP-NORC indicated significant voter concern regarding sustained high costs and dissatisfaction with the administration's economic management. The economy has been identified as a primary concern for American voters in recent elections, with Democratic candidates campaigning on affordability securing victories in some recent contests.

Reported Price Changes Across Key Sectors

Overall Inflation and Prices
Inflation stood at 3% in September, a rate consistent with January when President Trump assumed office, and remains above the Federal Reserve's 2% target. This figure is lower than the 9.1% peak observed under the Biden administration. Overall prices have increased by 25% over the past five years, a period during which wage growth also occurred. Some economists suggest official data does not align with President Trump's assertions regarding inflation.

Groceries
For the 12 months leading to September 2025, which includes a four-month period of the preceding administration, grocery prices rose by 2.7%. Since President Trump took office in January, grocery prices have increased each month, with one recorded decline in April. Specific items saw notable increases: coffee at 18.9%, ground beef (minced beef) at 12.9%, and bananas at 6.9%.

Conversely, some grocery items became less expensive. The price of a dozen large eggs, which was $4.93 in January, reached a high of $6.23 in March due to bird flu outbreaks, but subsequently fell to $3.49. Other items with price decreases over the past 12 months include butter and margarine (-2%), ice cream (-0.7%), and frozen vegetables (-0.7%). The President has cited decreasing prices for eggs and dairy products and noted that a Thanksgiving meal package at Walmart was less expensive than the previous year, though this package contained fewer items and a smaller turkey.

Electricity
Average residential electricity rates increased from 15.94 cents per kilowatt-hour (kWh) in January 2025 to 17.62 cents per kWh in August 2025, according to the US Energy Information Administration, an increase of over 5% for the year ending September.

Cars
Data from Kelley Blue Book indicates that the average price of a new car reached over $50,000 for the first time in September, up from $48,283 in January. This represents an annual increase of approximately 4%, compared to a typical 2-3% annual increase.

Other Costs
Housing, childcare, and healthcare expenses continue to be areas of public concern. Some individuals reported significant childcare costs and challenges in securing stable employment.

Economic Analysis and Contributing Factors

Economists have offered various analyses regarding price changes:

• Food Prices: Professor David Ortega, a food economics expert, stated that the President has "very little control over the price of food, especially in the short term." He identified tariffs, such as a 50% tariff on coffee from Brazil, and potential impacts of immigration policies on farming wages, as contributing factors. Diane Swonk, chief economist for KPMG, concurred, also citing "climate issues for a very bad growing season" for coffee. A White House official stated that President Trump does not control South American weather patterns, noting coffee price increases were a global trend, and mentioned addressing rising beef prices by temporarily increasing imports. The administration has also removed tariffs on certain products not widely produced in the U.S., such as bananas and coffee, and announced $12 billion in one-time payments to U.S. farmers.
• Electricity Prices: Professor James Sweeney from the Stanford Precourt Institute for Energy stated that it was "technically impossible" to halve electricity prices, explaining they reflect both generation and delivery costs. He attributed increases to a surge in demand, largely from data centers used for artificial intelligence, and supply issues. Cuts to renewable energy subsidies and tariffs on imported steel, which increase the cost of building new power generators, were also cited. Diane Swonk also noted the AI boom driving up electricity prices, suggesting it "exacerbates inequality" among households. A White House official stated that President Trump is expanding coal, natural gas, and nuclear power as "the only viable way to meet the growing energy demand and to lower energy prices."
• Car Prices: Erin Keating from Cox Automotive explained that tariffs are a primary inflationary factor in the automotive industry, contributing at least one percentage point to the annual increase in new car prices. She noted manufacturers are currently absorbing some tariff-related costs but anticipates further price increases in 2026. The White House stated regulatory actions were taken to "reverse the left's radical energy scam and save billions annually."
• Tariffs (General): President Trump has referred to tariffs as his "favourite word," citing "hundreds of billions of dollars" in U.S. revenue generated from import taxes. Administration officials argue tariffs are necessary to rectify past global trade policies and revitalize domestic manufacturing. Economists like Erica York of the Tax Foundation and Betsey Stevenson of the University of Michigan have suggested that tariffs can exert upward pressure on prices by restricting supply, and that tariff refunds could potentially increase prices by injecting more money into the economy. Tariffs currently generate approximately $30 billion per month in revenue for U.S. coffers.
• Other Factors: Economic expansion is projected at 1.9% for the current year, a decrease from 2.8% last year but surpassing earlier forecasts. The stock market maintains proximity to record high valuations, and recent employment data suggests a potential upturn in the job market. The White House has cited falling gas prices and wages surpassing inflation as positive indicators.

Proposed Economic Initiatives

President Trump has introduced several economic proposals aimed at reducing the cost of living, with further details expected. Many of these proposals are noted by experts as potentially requiring Congressional approval.

• Tariff Revenue Rebate: Trump is proposing a "subsidy" for most Americans, valued at $2,000, as a rebate for federal revenue generated by tariffs. Remaining tariff revenue, he stated, would be allocated to reducing the federal budget deficit. Economists indicate that if a $100,000 annual income cut-off were applied, the minimum cost would be approximately $300 billion, potentially exceeding existing tariff revenue and necessitating deficit financing. There are concerns such payments could increase prices by injecting more money into the economy. Treasury Secretary Scott Bessent stated that revenue gains from tariffs would be reflected in lower tax rates for Americans next year under the provisions of Trump's 2025 "Big, Beautiful Bill" spending package.
• Housing Initiatives:
  • 50-year mortgages: Proposed as an alternative to standard 30-year mortgages to facilitate home ownership. Some members of his own party, such as Republican Congresswoman Marjorie Taylor Greene, have expressed reservations, arguing it could reward lenders while people pay more interest over time.
  • Ban on Large Institutional Investors in Single-Family Homes: The administration intends to prevent large institutional investors (those owning over 1,000 properties) from acquiring additional single-family homes, with the goal of reducing home prices. Experts suggest this ban would likely have minimal impact on homeownership or rental affordability, as these investors currently represent a small overall percentage nationally and are reportedly divesting. The concept has bipartisan support.
  • Federal Purchase of Mortgage Bonds: Trump proposed that the federal government, through Fannie Mae and Freddie Mac, purchase $200 billion in mortgage bonds to reduce mortgage rates and monthly payments. Since the announcement, mortgage rates have declined by approximately 0.2 percentage points. While the President possesses the authority for this action, it is unpopular with some lawmakers and experts and could complicate efforts to privatize these companies.
  • 401(k) Funds for Home Deposits: Plans to permit retirement savers to use their 401(k) funds for house down payments have been announced.
• Healthcare Proposals:
  • Convert government health insurance subsidies (scheduled to expire at year-end) into direct cash payments for consumers, enabling them to "negotiate their own insurance."
  • Agreement with pharmaceutical manufacturers to reduce the price of obesity drugs for uninsured buyers.
  • "Most Favored Nation" agreements have been signed with nine drugmakers to reduce medicine prices in the U.S.
  • Require large tech companies to cover energy consumption for their data centers to reduce utility costs.
  • A health care affordability framework is expected, focusing on insurer accountability, drug prices, and transparency.
• Credit Card Interest Rate Cap: Trump proposed a temporary 10% limit on credit card interest rates for one year, effective January 20th, down from the current average of nearly 20%. Legal experts have expressed doubt about the President's authority to unilaterally enact this measure, suggesting Congressional action would be required. The banking industry and some analysts have warned such a cap could restrict credit availability for Americans with lower credit scores. The idea has bipartisan support from some lawmakers, but Republican leaders on Capitol Hill have expressed reservations. The administration is reportedly considering an executive order.
• Other Proposals: Include ordering a federal investigation into beef prices, adjustments to fuel efficiency standards, and the promotion of certain retirement accounts for children.

Public Perception and Voter Experiences

Public polling data indicates voter concerns regarding the sustained high costs of everyday items. Individual accounts illustrate varying economic impacts:

• Some voters reported decreases in prices for basic food items and improvements in gas and egg prices compared to a year ago.
• Others noted reducing food budgets due to increasing costs, particularly high childcare expenses, and observed "shrinkflation."
• Concerns were raised about electricity prices remaining high.
• Some expressed feeling more financially secure during a previous administration, while others, despite reported job market improvements, struggled to find stable employment.
• Concerns about potential impacts of foreign policy on the U.S. economy also led some to increase savings.
• A financial consultant reported finances being "marginally ahead" but questioned the sustainability of gains, and voiced apprehension regarding potential government interference with the Federal Reserve's autonomy.

The administration maintains that public perception will eventually align with its economic policies and that its tax cuts, deregulation, energy abundance, drug pricing deals, and trade deals are leading to real wage increases and economic growth.