As Americans prepare to vote in midterm elections on Tuesday, the U.S. economy presents a complex picture that is shaping voter sentiment, with the economy ranking as the issue that matters most to voters according to a recent NBC News Decision Desk Poll [1]. While the stock market has performed strongly during Trump's second term, with the S&P 500 index soaring more than 26%, consumer-facing economic indicators tell a more troubling story [1].
Inflation has become a significant concern for households, particularly following the outbreak of war with Iran. In September, inflation jumped to 3.7%, while wages rose just 3% from a year ago, marking the first time in months that inflation has outpaced wage gains [1]. This squeeze on purchasing power is being driven largely by spiking energy costs: regular gas prices have surged from $2.98 per gallon just before the Iran war to well above $4 per gallon—the highest levels just before an election—while diesel prices have climbed to all-time highs above $6, up from $3.75 when the war began [1]. These elevated energy costs are expected to ripple through the broader economy.
The housing market reflects additional economic pressures. Mortgage rates have soared to above 7% for the 30-year fixed rate following the Iran war, up from below 6% just before the conflict, while the 15-year fixed rate has jumped above 6% [1]. Combined with average home prices that have jumped 57% since January 2020 to $422,700 in September, many Americans are being priced out of the housing market [1]. However, existing homeowners have benefited substantially, sitting on more than $35 trillion in real estate equity as of the second quarter of 2026—more than double the amount from a decade ago—though this wealth remains largely illiquid [1].
The divergence between asset price appreciation and real wage deterioration appears to be fueling voter frustration, with a majority of voters expressing deep frustration with President Trump's economic stewardship despite strong stock market performance [1].
CONCLUSION
The U.S. economy presents a tale of two Americas ahead of the midterms: strong asset price appreciation benefiting existing stockholders and homeowners contrasts sharply with deteriorating real wages and surging consumer prices for everyday Americans. The combination of 3.7% inflation outpacing 3% wage growth, gas prices above $4 per gallon, and mortgage rates exceeding 7% is driving voter frustration despite the S&P 500's 26% gain, suggesting that equity market strength alone may not translate to political support.