So, what kind of shape—ignoring the panic headlines in the mass media—is our economy really in? Well, the Atlanta Fed’s GDP tracker is so far estimating growth over 5% for the third quarter. Inflation is steady enough, depending on your measuring stick, running between 2.5 and 3.5%. Almost everyone expects fuel prices to go down after the Iran situation is resolved.
More people are working than ever, and unemployment is steady at just above 4%. The private sector has added 877,000 jobs since early 2025 and government employment has dropped 327,000. The media headlines don’t mention the major shift of private sector versus government employment at all.
Tax cuts from the One Big Beautiful Bill helped the lower-income folks, contradicting the continual message from the Democrats that tax cuts only help the rich. Wage gains for the second quarter were ahead of inflation for lower-income earners: the lowest 25 percentile wage gains were 5.5%, the 50th percentile were 4.6% and the top percentile went up 1.5%, according to the Bureau of Labor Statistics.
For comparison, the net change in real median income household income by president: President Donald Trump’s first term increased $6,640, and President Joe Biden, $569. Trump’s second term (first 16 months), increased by $3,090, according to Stephen Moore, Committee to Unleash Prosperity.
Then why are voters, especially younger ones, so unhappy with the economy? Mohamed El-Erian, a veteran economist, and other economists, think it is because prices have not come down from their inflated levels of the Biden years. Inflation is much better now, but people are still dealing with higher prices, especially younger folks struggling with housing costs.
But the most persistent reminders are food and gas. Even National Economic Council Director Kevin Hassett talked about it recently, and guess what grocery item he mentioned? Beef.
Larry Kudlow showed data that recorded year-over-year inflation peaked at 9.1% under Biden and yielded a cumulative inflation of 21.4% for the Consumer Price Index (inflation) in Biden’s four years. Real wages actually declined during the Biden years, as opposed to increasing faster than inflation under Trump 1 and in Trump 2. None of those data points reflect Democrat “affordability” when they were in control. But the average person doesn’t consider that it takes some time to come back from 21% cumulative inflation.
Moore featured an analysis by Bruce Thompson, former assistant secretary of the Treasury and Merrill Lynch executive for 22 years, on our tax burden. It explains some voter discontent. It turns out that Americans pay more in taxes at all levels ($8.192 billion) than they do for food, clothing and shelter ($7.388 billion). And few are talking about this: all the free stuff the radical far leftists want, like free Medicare, free schools, almost free food, free rent, etc., would not be free. Those taxes would have to go way up to pay for all those “free” things. And with no police, no ICE, no prisons and an open border, imagine the chaos.
Polls continue to show that voters feel the economy is headed in the wrong direction, despite good to very good general economic data and a strong stock market. A recent McLaughlin poll of likely voters showed 56% feel the economy is getting worse; only 37% believe it is getting better. But 49% favor a congressional candidate who supports Republican free-market capitalism and 36% favor a candidate that supports Democrat big government socialism. You follow that?
What about the most important issue? How can Congress, especially the Senate, blatantly ignore this question, as it is Politics 101? Some 44% of voters said the economy was the most important issue, with 29% saying “social” and 16% saying security. When was the last time in McLaughlin’s recent time series the economy wasn’t the most important issue? October 2021.
So, why are the Republicans resting on their laurels and not doing much this year to help average Americans with capital gains tax relief and passing the SAVE Act to provide more secure elections?
My biggest concern? Boxed beef prices have shown some weakness lately. Have we bumped up against the limits of our demand for beef? Not only are we front and center when people complain about food prices, we’ve also heard complaints about farm payments to compensate for tariffs hurting grain prices.
And a federal judge in Minnesota has allowed another packer lawsuit to move forward, for a case citing prices in 2015-20. I guess higher prices have their own set of problems. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
