Trump running out of options to fix inflation, economic woes before election, experts say

WASHINGTON— With three months until Election Day, experts say there is little the Trump administration can do now to reassure Americans who have struggled for years with stagnant wages and high inflation before they head to the polls; That complicates midterm campaigns for Republicans and sharpens the opportunity for Democrats to regain some control in Washington.

Experts say that’s partly because the Trump administration has so few tools to turn the tide so quickly and has shown little interest in using the ones it has. Instead, President Trump insisted on continuing the war in Iran and continued to impose new tariffs on trading partners, even though both contributed to rising costs of food, gas and other basic needs.

Experts said other options, such as issuing rebate vouchers to consumers or releasing strategic oil reserves, would be costly in the long run.

“There’s not much out there that won’t cost more over a 14-week period than it does now,” said Patrick Harker, a professor at the University of Pennsylvania’s Wharton School and former president of the Federal Reserve Bank of Philadelphia.

The Federal Reserve on Wednesday also refused to raise interest rates, its primary tool for reducing inflation, instead keeping interest rates steady. Trump did not support a rate hike, instead pressuring the central bank to lower interest rates, which could lower borrowing costs but increase inflation.

Some factors that increase costs, such as damage to oil refining capacity in the Middle East due to the war in Iran, are almost impossible to resolve in the near term. Others, including food products, are already included in pricing due to tariffs and fuel costs, experts said.

Incumbent parties often suffer midterm losses when voters are generally pessimistic about the economy; That remains the case now, despite the extraordinary resilience of the U.S. labor market and strong stock returns.

Consumer prices fell for the first time in six years in June, largely due to a drop in gas prices as the Iran war appeared to be moving towards a resolution.

New data on Thursday showed the U.S. economy grew at a slow pace of 1.5% from April to June. It also showed that consumer spending and inflation were slowing. However, slowing inflation does not mean decreasing costs.

As the Iran war enters its sixth month this week, average gas prices across the country have risen above $4 per gallon. The price of Brent crude oil on Wednesday rose It rose to $90 per barrel as the USA and Iran launched new attacks.

The White House did not respond to a request for comment. But Trump argued on Wednesday that the economy was strong — citing new U.S. auto factories in part as evidence — and sharply criticized the Federal Reserve’s decision to leave interest rates unchanged.

Speaking to reporters at the Oval Office event, Trump said, “They want to keep interest rates high, but we will get through it.” “There are things happening in our country that no one sees.”

As Democrats take up the economy as the defining issue of the midterms, Trump has promised improvements but also called affordability concerns a “hoax.” Last week, he rejected the idea that he should rethink his unpopular Iran strategy because of looming midterms.

“No, I can’t imagine the election has anything to do with it,” he said last week, before renewing the attacks. “I think people are very impressed.”

Jonathan Nagler, a New York University professor who studies how the economy shapes politics, said it’s impossible to predict how voters will feel about the economy three months from now because there are so many variables.

But Nagler says the data makes clear that “the better the economy does, the better the incumbent will be,” and voters will blame Trump and his party if the economic woes continue; especially when it comes to gas prices, which are “directly tied to Trump” and “a non-trivial expense.”

“Democrats can draw a very straight line between Trump’s decision to go to war with Iran and rising gas prices. It’s very, very easy to explain that to people in a pretty convincing way,” Nagler said. “Democrats might try to say, ‘Hey, there has to be some accountability here.’”

KPMG chief economist Diane Swonk said inflation has been rising for years “in a way that has made the price level too high for many people” and is the biggest economic problem facing many Americans.

“And this is unlikely to change in the next few months; some spillover effects of the war in Iran (most importantly in terms of the autumn harvest and food prices that will continue well into 2027) as well as occasional ceasefires and damage to refining capacities will still play out,” he said.

All of this has contributed to “simmering” service sector inflation and Trump’s latest tariffs, which means “more paperwork, more costs, and another increase in prices in the pipeline,” Swonk said.

Harker said management has no good options for lowering prices until November. He said cutting tariffs takes time to get to shelf prices, so even if Trump decides to cut them, it wouldn’t provide a quick fix.

The biggest variable between now and November is energy, Harker said, and no economic tool allows the administration to control what happens in the Persian Gulf. Even if Trump’s war with Iran ends, it will take a significant amount of time for gas prices to drop, economists say.

The Fed may decide to raise interest rates in September, but Harker said it would take time to filter through the economy and that it would do “nothing” before November.

On the campaign trail, Trump promised to “immediately reverse the disastrous effects of this.” [President] Biden will increase inflation and rebuild the greatest economy in the history of the world,” where “incomes will soar, inflation will disappear completely, jobs will come rushing back, and the middle class will become richer than ever before.”

A. latest CNN poll While 65 percent of Americans believe Trump’s policies have worsened economic conditions in the country, less than a quarter (22 percent) said they have improved conditions, and 67 percent believe Trump’s choices in Iran have harmed the United States

The poll found that Trump had an approval rating of 34%, a career low at the end of his first term, and that his support on key issues had fallen further: 28% on Iran, 25% on inflation and 21% on gas prices.

A recent Pew Research Center survey found that most Americans I don’t feel great about the economy — 24% rated economic conditions as excellent or good, 41% as “just fair” and 35% as poor. It also turns out that voters want candidates running for Congress in November. talking about economic problems.

Democrats see the poll numbers as an opportunity to win over undecided voters, and that’s becoming more urgent as the campaign heads into the fall.

House Democratic Leader Hakeem Jeffries (D-R.) last week placed the blame for rising costs squarely on Trump’s tariffs, his “reckless choice for war” in Iran and cuts to health care in last year’s federal spending package.

Vidhya Jeyadev, a spokeswoman for the Majority Democrats, who are focused on growing the party, said Democrats now have an opportunity to bring in Republican voters who are disillusioned with the way the president is handling the economy.

“We need to tie what people feel every day — rising costs of rent, food, utilities — directly to the choices Trump and Republicans are making,” Jeyadev said.

Many Republican leaders have acknowledged the economic challenges while defending Trump’s policy decisions.

They widely supported the war in Iran as a necessary step to stop Iran’s nuclear ambitions. House Speaker Mike Johnson (R-La.) He recently defended Trump’s tariffsHe also acknowledges that some sectors have experienced “challenges” as a result, but says “things are looking up as we head into this election cycle.”

Swonk said some economic indicators point to a surprisingly strong economy that benefits the wealthy.

However, he said, “There’s a reason people are upset, and that’s that inflation is rising, as are stock returns — but not everyone has stock returns. Everybody feels inflation. And that creates a bigger gap between the haves and the have-nots.”

“What everyone really cares about is that rising prices don’t come back and their wages don’t keep up,” Swonk said. “It doesn’t feel like you can do as many things as you used to. And it’s hard.”