U.S. economy grows as household purchasing power comes under pressure

The U.S. economy expanded at an annualized rate of 2.2%, while inflation rose to 3.7% from 3% when Trump took office in January 2025. Although artificial intelligence investments have supported economic growth, tariffs and higher energy costs stemming from the war with Iran have placed pressure on consumers' purchasing power.

Inflation-adjusted median household income in the United States increased by 2.6% to $87,460 in 2025, but rising living costs have limited the benefits of those income gains. According to estimates from the Institute on Taxation and Economic Policy (ITEP), middle-income households could face an average annual loss of $1,700 in 2026, while households in the lowest income group could lose approximately $750. Meanwhile, average monthly job growth has slowed to 34,000, and 30-year mortgage rates have climbed to 7.4%. The figures suggest that U.S. economic growth has not translated into comparable improvements in household financial well-being.