Trump touts affordability, some Americans still feel crisis

President Donald Trump spoke about the economy and affordability of Americans in his annual State of the Union address on Tuesday, saying conditions had improved in his second term.

“Our nation is back: Bigger, better, richer and stronger than ever before,” he said early in his speech.

But many Americans don’t seem to feel that way. About 72% of Americans rate the U.S. economy as “fair” or “poor,” according to a January survey of more than 8,500 U.S. adults. Pew Research to create. According to the report, overall consumer confidence fell by approximately 13% on an annual basis as of February. University of Michigan Consumer ResearchIt is published monthly.

During his speech, Trump cited falling inflation, job growth, tax cuts and stock market gains as evidence that the economy is “stronger than it’s ever been before” under his leadership.

Inflation in January was 2.4% annually, down from 3% in the same period last year, according to the Bureau of Labor Statistics, and egg and gas prices were down 48% and 8%, respectively, from last year, according to BLS data.

Unemployment was at 4.3% in January; That’s up slightly from around 4% a year ago, but still relatively low, according to the Labor Department. Employment growth was slow through 2025 but picked up in January, with nonfarm payrolls rising by 130,000. The S&P 500 index rose 16% by the end of 2025, signaling a successful year for the stock market as a whole.

But despite these factors, many consumers still feel stuck. When adjusted for inflation, wages have remained virtually unchanged since 2020, according to analysis conducted in January. Hamilton ProjectA nonpartisan economic research group.

That discrepancy may be why Americans are so pessimistic about the economy, despite bright spots like gains in the stock market and relatively low unemployment, says Heather Long, chief economist at Navy Federal Credit Union. The costs of basic needs like housing and healthcare continue to rise, making it increasingly difficult for Americans to keep up or feel like they can get ahead.

“There is an ongoing affordability crisis in America, and it has been building for years,” he says. “It got worse because of the pandemic and the inflation that followed, and last year… it didn’t really get better.”

“As the President made clear in his State of the Union address, there is more work to be done,” White House spokesman Kush Desai said in a statement emailed to CNBC Make It. He said the administration is working on policies that will “put more money into Americans’ pockets.”

Experts say consumer behavior in general is showing signs of distress. Take the personal savings rate for example. The average share of disposable income Americans spend fell to 3.6% in December, the lowest level since 2022. Bureau of Economic Analysis data.

“Many households are becoming much more conscious of recurring expenses,” he says jovan johnsonA certified financial planner and certified financial advisor who works primarily with small business owners. He says he’s seen families take precautions, such as having one spouse leave the workforce to stay at home and reduce daycare costs.

“I’m also seeing more meal prep and a noticeable decline in discretionary lifestyle spending, with things like boutique fitness memberships and premium gyms often being replaced by more affordable options,” she says.

But some consumers continued to spend. Gross domestic product increased in the fourth quarter of 2025, driven by consumer spending, According to BEA data. But top earners drive most of that spending: The top 20% of earners account for nearly 60% of all U.S. consumer spending, according to a recent analysis by Moody’s Analytics.

Economists have labeled this the “K-shaped” economy to show that high-income earners spur economic growth with continued spending while lower-income Americans pull back.

But Long sees 2026 as an “E-shaped economy” with three stages:

1. High-income earners who are well off and are served by retailers and credit card companies with increasingly premium and luxury offerings.
2. Middle-income people who are “purifying water”. They’re still paying their bills, but they’re turning to discount and wholesale retailers like Costco to stretch their dollars.
3. those with low income relying on credit cards and Buy Now, Pay Later plans to make ends meet.

Long says the tax refunds, which Trump says will be the largest tax refund to date, could help individuals cover expenses or increase their savings in the short term. The average refund amount for individual filers as of Feb. 20 was around $3,800, according to the Internal Revenue Service.

44 percent of Americans expecting a refund said they would set aside at least some of their savings, and 41 percent said they planned to spend it on necessities in February. Intuit TurboTax survey to create. More than a quarter of those planning to save said they did so because they were worried about the state of the economy.

Tax refunds are only a “temporary solution” for those who are behind on payments or struggling to save, Long says.

In his State of the Union address, Trump called on Congress to act on pending legislation. lower body and medical expenses.

While falling prices may help ease the affordability crisis, Long and other experts say wages must rise and continue to outpace inflation to truly solve the problem. “Unless you see really strong wage growth, it’s going to be harder for people to make all their payments,” Long says.

Democratic leaders say the affordability crisis is far from over.

“When I campaigned for Governor last year…everywhere I heard the same pressing concern: costs are too high,” Virginia Gov. Abigail Spanberger said in delivering the message. Democrats’ reaction to the State of the Union on Tuesday.

Sen. Elizabeth Warren, D-Mass., sent a letter to Trump on Wednesday, saying the president’s characterization of the economy is “contradictory” with what Americans are experiencing. He asked Trump and his administration to provide evidence that their policies lower costs for Americans.

“Despite your claims, you have not ‘solved’ affordability or ‘defeated’ inflation.” he wrote. “Instead, prices in American homes have skyrocketed in the past year.”

Heidi Shierholz, president of the Economic Policy Institute, a nonpartisan think tank, says that although the government has the power to influence prices in certain industries, policy changes can also affect wage growth, something the general population often doesn’t consider.

“The public believes that inflation is the policymakers’ fault, and that’s almost never true,” he told CNBC Make It. “The flip side of this is that people, when asked in surveys, take personal responsibility for what happens to their wages, whether good or bad.”

Shierholz says strengthening labor laws, increasing the minimum wage and improving social safety nets like unemployment insurance are some of the ways the government can step in to address lagging wage growth.

“The minimum wage is not going to change at the federal level anytime soon,” he says, adding that many states have recently increased their minimum wages or are planning to increase them. Like other actions in Congress Law on Protecting the Right to Organize While the legislation is unlikely to pass anytime soon, it could help bolster protections for unionization efforts, Shierholz says.

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