After promising a “Trump Economic Golden Age,” the administration touts GDP gains and rising investment, while labor market figures and cost-of-living pressures continue to challenge millions. As America closes out the year, experts remain divided on whether the economic recovery is sustainable, or overstated.
Signs of growth amid persistent instability
The United States economy grew at its fastest pace in two years during the third quarter of 2025, rebounding from a contraction earlier in the year. According to the Bureau of Economic Analysis, gross domestic product expanded by 4.3% between July and September, driven largely by robust consumer spending and increased exports. These figures were welcomed by the White House, which described them as evidence that Trump’s policies were “full steam ahead.”
Yet outside of headline growth, several key sectors showed signs of fragility. According to the Institute for Supply Management, US manufacturing contracted for the ninth consecutive month in November, with businesses citing uncertainty over new tariffs as a major concern. While the Trump administration defends these trade policies as part of a long-term plan to revive domestic industry, economic indicators suggest short-term disruption has outweighed gains. A senior economist at KPMG told The Washington Post in October that job losses from rising input costs have exceeded employment gains in protected sectors like steel and aluminum.
In the tech sector, business investment in artificial intelligence has become a significant economic driver. Harvard University economist Jason Furman noted that spending on AI-related infrastructure accounted for much of the GDP growth in the first half of the year. As demand for data centers surged, investment in information processing equipment continued to rise, though more slowly than earlier in the year. According to RSM US chief economist Joe Brusuelas, AI-related spending made up roughly 14% of third-quarter GDP growth.
Inflation Holds Steady as Consumer Sentiment Declines
Despite Trump’s repeated vows to lower prices, inflation hovered at 2.7% in November, according to the Consumer Price Index. While this is down from the 2022 peak of 9%, price growth remained above the Federal Reserve’s 2% target for much of the year. The administration’s trade policies played a complicated role: tariffs on imported goods initially raised prices for items like used cars and electricity, but a late-year reversal lifted tariffs on groceries such as beef and coffee, temporarily easing pressure on food costs.
Interest rates, which had reached two-decade highs in 2024, were reduced three times by the Federal Reserve this year. But Fed Chair Jerome Powell emphasized caution, stating that the central bank was “well positioned to wait and see how the economy evolves.” Trump, who has frequently criticized Powell, pushed for faster cuts. Despite the lower benchmark rate, borrowing costs for mortgages and auto loans have remained elevated due to market conditions.
Meanwhile, the labor market showed clear signs of weakening. According to the Bureau of Labor Statistics, the US economy lost 105,000 jobs in October, amid the longest government shutdown in American history. The unemployment rate climbed to 4.6% in November, its highest level in over four years. Trump attributed the rise to a shrinking federal workforce, although the number of unemployed Americans increased by nearly a million since January, far outpacing reductions in public-sector jobs.
Consumer spending remained steady, particularly in areas such as healthcare and home goods, according to S&P Global analysts. But consumer confidence has continued to fall, with many Americans unconvinced by top-line figures. For economists, the disconnect between statistical growth and public sentiment remains a defining feature of Trump’s second presidency so far.
