On any given week, the U.S. economy will generate numbers that look good in some ways (unemployment low by historical standards, inflation low by the standards of Biden’s presidency) and not so good in other ways (a tumultuous stock market, a recent spike in gas prices, widespread frustration with the cost of living, growing economic pessimism, gargantuan public debt, etc.). I’m on the more pessimistic side; I think a lot of generally smart economists have focused on the cheerier data and shrugged off the fact that, as the Wall Street Journal put it late last year, Americans have faced almost five years of persistent inflation. It feels like everything costs an arm and a leg these days, and for a lot of people it seems like, if America is prospering, someone else is enjoying all that prosperity.
I think this is a particular problem for Republicans because President Trump announced that his presidency would begin a golden age, and he habitually characterizes the current economy as the best ever. He says things like, “inflation has stopped, wages are up, prices are down,” and “we’re poised for an economic boom the likes of which the world has never seen.”
I mention all this because the latest quarterly update to the U.S. gross domestic product is out, and the U.S. economy grew at . . . a 0.5 percent annual pace from October through December. That’s pretty sluggish — no doubt exacerbated by the government shutdown — and a steep drop from the previous quarters.
Last September, Commerce Secretary Howard Lutnick said that it was too early to judge the success of the president’s economic agenda, and that “the economy that Donald Trump owns starts at the end of this year. . . . The jobs are coming, the factories are coming, we know the cavalry is coming. You know it can hear the thunder of the hooves coming.”
It’s a stretch to contend that economic numbers from October to December 2025 still count as “the Biden economy,” but fine. We’ll see what the first estimate for the first quarter of 2026 looks like when it is released April 30. But considering the economic effects of the Iran war and the rising energy costs, how optimistic should Americans be?