Next week, U.S. President Donald Trump will deliver the first State of the Union speech of his second term, having presided over an economy that grew 2.2 percent in the past year. Trump’s economic agenda, however, was far more ambitious than merely achieving growth, including a revamping of the country’s trade and immigration policy.

Has Trump’s immigration policy achieved its economic goals? Did economists accurately predict the effects of his tariffs? Could the Trump administration’s corruption impair the U.S. economy?

Next week, U.S. President Donald Trump will deliver the first State of the Union speech of his second term, having presided over an economy that grew 2.2 percent in the past year. Trump’s economic agenda, however, was far more ambitious than merely achieving growth, including a revamping of the country’s trade and immigration policy.

Has Trump’s immigration policy achieved its economic goals? Did economists accurately predict the effects of his tariffs? Could the Trump administration’s corruption impair the U.S. economy?

Those are a few of the questions that came up in my recent conversation with FP economics columnist Adam Tooze on the podcast that we co-host, Ones and Tooze. What follows is an excerpt, edited for length and clarity. For the full conversation, look for Ones and Tooze wherever you get your podcasts. And check out Adam’s Substack newsletter.

Cameron Abadi: The rate of inflation has recently been falling, but affordability remains the most popular buzzword of U.S. politics. Has the politics of inflation been overtaken by events?

Adam Tooze: First of all, the two things are not contradictory. Inflation is a measure of the rate of change of prices. When inflation stops, the rate of increase goes down. That’s what we mean when we say that inflation is under control. But of course, affordability is the description of a state, not a rate of change. So a surge in inflation, which then levels out and means that inflation falls to zero, can leave you feeling as though you can’t afford your life, because the prices don’t go down when inflation goes to zero—they stay stable.

Most economists will tell you that the real wage has actually slightly gone up, and especially for lower-income Americans, because of the particular nature of the labor market recovery after COVID, where a lot of people became unemployed and then shuffled back into jobs, and there were shortages of workers in key areas and so wages popped. The real puzzle is not that inflation has slowed down dramatically and that we have an affordability crisis, but that real wages appear to have gone up and that we have an affordability crisis. Now that’s a real puzzle, because in general, though prices have gone up, wages have gone up by more. So people should in fact feel better off than they do.

So what are ways of squaring this circle, of making sense of this? Well, one answer would be to say, there is an affordability issue, but it’s not new, and so really what these opinion polls are showing is just the decades-long concern of Americans, especially toward the bottom half of the income distribution, about the fact that they can’t afford a decent life. So when economists then say, “Well, actually, real wages are going up,” that doesn’t answer the question, because real wages........

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