The Race for the Trump Economy

Victor Davis Hanson
American Greatness

The current economic indicators, at least those attributable to the 10-month Trump administration, are strong.

Fourth-quarter GDP is estimated to grow between 2.7 and 4 percent, the robust latter figure according to the Atlanta Federal Reserve Bank.

Inflation from June to August ranged from 2.7 to 2.9 percent, significantly lower than the 5 percent annual average during Biden’s 2021-2025 term.

Gas prices now average $2.98 per gallon, compared to $3.46, the average cost during Biden’s four years.

In less than a year, Trump has increased oil production by one million barrels per day.

Unemployment in the second quarter of 2025 stayed steady at 4.2 percent, roughly the same as the 4.1 percent during the final month of Biden’s tenure.

The stock market has reached an all-time high. Foreign investment is pegged at record levels. Tariff revenue could reach $400 billion by the end of the year—vastly outpacing the $77 billion in all of last year, 2024.

In other words, the economy is rolling along.

To the extent the Trump administration has a problem with the economy, however, it is threefold.

One is public perceptions.

In 2021, Biden foolishly borrowed $7 trillion and infused it into the economy at precisely the wrong time. The economy had already been stimulated by Trump’s prior massive lockdown borrowing.

The COVID-19 pandemic was ending. The emerging public was eager to get out, splurge, and satisfy its two-year pent-up consumer demand. And yet supply chains were still disrupted and unable to supply sufficient goods or services.

That perfect storm would ensure that there were too few goods and services for too much cash-flush, inordinate consumer spending.

Despite warnings from even liberal economists that the “stimulus” was a recipe for hyperinflation, Biden—or whoever at that time ran the country—went ahead with his massive borrowing and ensured that inflation would peak at an annual rate of 9.1 percent in 2022.

The mess continued, however, since inflation still kept up in the next two years at 3-4 percent. And when Trump entered office in 2025, goods were over 21 percent higher than when Biden had been inaugurated—with even steeper prices on key staples like energy, groceries, automobiles, housing, and insurance.

Most prices have never gone down. The fact that they have remained high over the last ten months has been blamed on Trump, on the strange rationale that he was supposed to have engineered a deflationary economy in less than a year to lower what Biden recklessly had raised over four years.

The left-wing propaganda is Orwellian:

“Our four-year policies created hyperinflation. Your 10-month antithesis did not. But you are still responsible for not undoing in ten months what we did in 48 months. Therefore, we deserve to return to power to repeat the disaster that we made under Biden.”

Second, the administration and Republicans have rarely compared their own economic record with that of Biden’s dismal four years to explain how there is improvement in almost every area.

Trump’s circle understandably has emphasized its accomplishments on the border, reducing crime, curtailing DEI, restoring military recruitment, and especially in foreign affairs, such as the ruination of Iran’s nuclear facilities, the reenergizing of NATO, the oversight of Israel’s successful wars against Hamas and Hezbollah, and achieving ceasefires in conflicts across the globe. These are notable successes. Talk of a Trump Nobel Peace Prize is understandable and warranted.

But the recent off-year elections, albeit in blue states like California, New Jersey, New York, and Virginia, were decided mostly on perceptions of “affordability,” shorthand for the economy.

When independent voters heard little from Republican candidates about the good economic news or of the sharp contrast from the prior Democratic train wreck, they simply bought the left-wing line that the lack of “affordability” was due to the administration in power—that is, Trump.

Third, most of Trump’s key economic initiatives are long-term and will not be fully realized by the end of 2025 or in early to mid-2026.

No one yet knows what the full effects will be of record deregulation and tax cuts by 2026. No administration has ever prompted the deportation of 2 million illegal aliens, as will happen by 2025, with a likely 2 million more in 2026.

Nor does anyone yet know the positive effect on jobs and wages when there are fewer foreign workers undercutting American labor, and even fewer people receiving costly state and federal entitlements.

No one knows what will follow from a record production of nearly 14 million barrels of oil per day, which, with new federal leasing and fewer regulations, may still increase even more in 2026. More federal revenue from leasing and exports? Cheaper natural gas and gasoline for consumers?

No one knows the economic role of a rapidly advancing artificial intelligence industry, with likely huge breakthroughs from robotics to medicine. No one knows the impact of a new generation of smaller micro-nuclear generation stations or more natural-gas power-plants that should provide electricity far more cheaply than massive, state-subsidized wind and solar farms.

No one knows the effect of the massive promised foreign investment. Trump talks confidently of $15 trillion or more promised in foreign investments. If just a third of that sum were to be actualized by late 2026, together with trillions of dollars in new domestic investment, the effect on GDP, unemployment, and federal revenues would be enormous.

Tariffs have caused neither a trade war, stock collapse, nor recession. Instead, the use of tariff threats, jawboning, and deals has resulted so far in little additional inflation, at least if the courts do not intervene.

Again, even downwardly negotiated new tariffs could bring in $400 billion in additional revenue. Far from stuck in a destructive trade war, the U.S. is more likely in 2026 to be in the strongest and most advantageous commercial position with both America’s allies and rivals, like China, in the last half-century.

The left is certainly apprehensive about the prospect of a likely booming pre-midterm Trump economy by November 2026.

The current shutdown, preplanned by Democrats to synchronize with the recent elections, makes no sense given their prior damnation of minority-party shutdowns, their prior serial votes to approve continuing resolutions, and their prior incoherent claims about putting a sunset on massive Obamacare subsidies, which they also once insisted would never be necessary.

So the likely real purpose of the shutdowns is a nihilist effort to slow down or sidetrack the expanding Trump economy—a sort of smaller replay of what the purported “natural” disaster of COVID-19 did to the then-booming 2019 Trump economy that likely cost Trump the 2020 election.

In addition, there is no reason now for the Fed not to lower rates, and far more than the recent paltry 0.25 percent cut. There is neither wild growth nor high inflation, but most certainly a stagnant housing market, high mortgage rates, and natural uncertainty among builders.

For most of 2025, the media has tried to talk the U.S. into a recession—wrongly predicting a March stock market crash, wrongly assuring us of a mid-2025 recession, wrongly maintaining that tariff-borne hyperinflation would bury the economy by fall, and wrongly insisting a disastrous trade war was upon us, one that would crash both the U.S. and Chinese economies.

If the shutdown were quickly ended and the Fed steadily lowered interest rates by at least 2 percent, and if the media would just report the news rather than seek to create realities by falsification, then a strong, and soon to be even more robust, economy would likely determine the 2026 midterms, and with it the Trump presidency.

So the current Trump economy is in a race of sorts. The challenge is not nature, not war, not the unpredictable, and certainly not wrong economic policies and agendas.

The rub is a failure to highlight the radical improvement from the Biden years in just a few months, to explain that novel policies are already in motion that may revolutionize the American economy within a year, and to recognize the destructive efforts of partisan shutdowns, partisan high interest rates, and partisan hysterical doom and gloom fake news.

If Trump meets these challenges, voters could see the economy take off as never before in 2026—just in time for the midterms.