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The midterm elections are typically challenging for the party in power. The GOP already has the deck stacked against it heading into 2026: its divisive president has an approval rating in the low 40s and razor-thin majorities in Congress. But it is becoming clear that the state of the economy is what should be keeping Republicans awake at night.
However, not all recent economic news has been bad. There are reasons for optimism despite the obvious challenges ahead. GDP surged in the third quarter coming in at 4.3% (3.8% adjusted for inflation,) well north of the 3.3% projected by experts. The Trump administration is taking a well-deserved victory lap.
But GDP growth is a backward-looking snapshot of economic output and is not necessarily reflective of the overall trajectory of the economy. Historically, GDP has remained strong even when the overall economy was teetering (4.9% growth in Q3 2007, for instance), and Republicans will have to contend with a variety of factors ranging from a weakening labor market to persistent inflation in the new year.
Republican losses in November’s off-year elections were due almost solely to economic concerns, according to exit polling. Democrats effectively weaponized the matter of “affordability” and parlayed it into sweeping victories in Virginia and New Jersey, and the election of Zohran Mamdani, an avowed socialist who will wink and nod at Islamic terrorism as mayor of New York City.
Instead of meeting this challenge head-on, the White House has chosen to deny economic realities.
“They use the word ‘affordability,’ and that’s their only word. They say, ‘Affordability,’ and everyone says, ‘Oh, that must mean Trump has high prices.’ No, our prices are coming down tremendously,” Trump said at a December rally in Pennsylvania. “They have a new word. They always have a hoax. The new word is ‘affordability,’ so they look at the camera, and they say this election is all about affordability.”
Of course, this “who are you going to believe, me or your lyin’ eyes?” routine never works. Former President Joe Biden continuously lied about the state of the economy and his administration’s contributions to the inflationary crisis the country experienced during his presidency. It is baffling that Trump and his team would fall into this same trap after campaigning against this same type of rhetoric last year.
Trump’s frustration is not entirely unwarranted. After Trump blew out spending and hampered the economy via Fauci-ism at the beginning of the COVID-19 pandemic, contributing to the ensuing recession and inflationary spiral, Biden sent the crisis into high gear, sending out two additional rounds of stimulus checks and stoking fear to prolong lockdowns and other ineffectual measures that further damaged the economy. Of course, it is true that Trump is not solely to blame for price increases, but nearly a year into a presidential term, you can no longer blame your predecessor. Voters look to the man behind the resolute desk when the economy is teetering, and unfortunately, that man has not done anything meaningful to bring down consumer prices.
This brings us to the 800-pound gorilla in the room: the president’s tariff regime. The working class was struggling to afford goods and services after four years of Biden at the helm of the world’s most powerful economy, and Trump almost immediately did the one thing that would spike prices even further. His disjointed tariff policies, which have been far harsher on allies such as Canada than on adversaries such as China, spiked prices on many imports, including coffee, food, electronics, and children’s toys. The trade war sank the soybean and corn market, leading to yet another farm bailout, using a portion of the tariff revenue taken in by the state. As of now, Trump and his team have refused to admit the failures of the wide-ranging tariffs. The president has erroneously said tariffs have brought in “hundreds of billions of dollars,” and maintains the Biden-esque fib that the economy is getting along swimmingly.
“In my first term, we built the greatest economy in the history of the world… Our second term is blowing it away,” Trump said in Pennsylvania. “We’re doing it again, but bigger, better, and stronger than before.”
Voters are not buying it. Sixty-one percent of respondents polled disagreed with Trump’s tariffs, and his approval rating on the economy is underwater by 15 points, according to RealClear Polling. Three-quarters of Americans are concerned that tariffs will lead to higher prices, and only 68% of Republicans approve of Trump’s tariff policy, which is notable given the broad support the president generally enjoys among Republicans.
The president and his party will also have to deal with a stagnant labor market as we approach the midterm elections. Hiring has slowed to a near standstill, and unemployment sits at 4.6% as of November, up from 4.1% in June. Trump has maintained for years that extensive tariffs would result in the reshoring of American manufacturing; however, the precise opposite has happened. Blue-collar industries have been hit especially hard; the manufacturing, mining, and transportation industries have shed 65,000 jobs year over year. Rising unemployment and a cooling labor market prompted the Federal Reserve to cut interest rates three times this fall and winter, including at its most recent meeting on Dec. 10. But Fed Chairman Jerome Powell has hinted that further cuts are unlikely in the short term.
“In the near term, risks to inflation are tilted to the upside and risks to employment to the downside — a challenging situation,” Powell said. “There is no risk-free path for policy as we navigate this tension between our employment and inflation goals.”
The most recent consumer price index data available is for September, when year-over-year inflation was at 3%, a point above the Fed’s goal of 2%. Unfortunately for the working class, the price increases of many essential goods and services are dramatically outpacing the overall CPI. Meat, poultry, fish, and eggs were up 5.2%-5.6%, electricity costs rose 5.1%, and the price of natural gas jumped 11.7% year over year.
Consumer confidence hit a six-month low in late October, driven primarily by lower-income and younger Americans’ struggles to afford everyday expenses amid rising prices. Christopher Rupkey, chief economist at FWDBONDS, recently told Reuters, “Consumers are weary and for good reason, the stock market records are not helping them get jobs or put food on the table, and with store-bought goods inflation still rising, many Americans are being left behind in Trump 2.0.”
WHAT ISLAMIC FUNDAMENTALISM CAN TEACH US ABOUT TODAY’S DEMOCRATIC PARTY
It is time for Republican leadership to read the writing on the wall, and that starts at the top. Trump’s grand tariff plan is a failure, but due to the (almost certainly unconstitutional) nature of the way these policies went into effect, they are easily reversible. The White House should dump the policies that are artificially jacking up prices and focus on securing the elusive trade deals that have largely evaded the administration. The type of spending reduction and deregulation that would propel the economy to heights that would make voters forget about years of persistent inflation is unlikely to come to fruition with tiny majorities in Congress, but Republicans control the government; if not now, when? To quote Yogi Berra, “It gets late early out there.” Without an immediate course correction, Republicans are at risk of handing Congress back to the Democrats, who would end any hope of codifying any part of the Trump agenda, and almost certainly impeach the president a third time, for whatever reason they cook up next.
Brady Leonard (@bradyleonard) is a musician, political strategist, and host of The No Gimmicks Podcast.
