Reversing Trump’s slide in economic ratings will be an uphill battle

A noteworthy development in President Trump’s second term is the American public’s loss of confidence in his economic policies.

Polling on his handling of the economy varies considerably for Republicans and Democrats. But the biggest swing has been among independent voters, which shows his approval rating has fallen as low as 25 percent. Trump’s slide in popularity over the last year is in marked contrast to his first term, when nearly half of U.S. adults approved of his policies.

So, what accounts for the dramatic turnabout? 

There are three primary considerations. Trump’s inability to bring inflation down as he promised, weaker job creation since he assumed office last year, and growing inequality, as Trump’s policies favor the rich and penalize the poor.  

Of these, the most important is Trump’s failure to address voters’ concerns about the high post-pandemic cost of living. According to CNN data analyst Harry Enten, Trump’s average approval rating on inflation is 42 points underwater and at minus-60 points among independents.

When Trump assumed office in 2025, inflation was slowing. The Fed had raised interest rates from 0.25 percent to 5.5 percent in 2022 and 2023. Prices of goods had even declined, and the Fed’s target of 2 percent inflation was in sight. But goods prices subsequently rose after Trump announced the biggest increase in tariffs in 100 years last April. Progress in lowering inflation stalled. 

Meanwhile, inflation has picked up, reaching 3.3 percent in March due to the spike in oil prices related to the war with Iran. The fallout is expected to spread throughout the economy in the near term due to higher costs for transport, fertilizer and food.   

Another problem Trump faces is that the labor market has gone from experiencing robust growth through 2024 to stagnating over the past year. On the demand side, firms have been cautious about hiring new employees because of uncertainty about the effects that tariffs and artificial intelligence will have on the economy. 

The unemployment rate has not spiked materially, mainly because labor supply has slowed due to aging demographics and declines in immigration related to Trump’s policies. The groups that are impacted the most are employees who are nearing retirement and have been laid off and young people who are seeking their first jobs. 

Finally, one of the biggest differences from Trump’s first term is that his economic policies have been more regressive. The primary beneficiaries of the 2025 tax cuts have been the richest Americans. Tariffs and cutbacks in Medicaid and SNAP have adversely impacted lower-income groups. Federal Reserve data show that the top 1 percent of households held about $55 trillion in assets in the third quarter of 2025, which is roughly equivalent to assets held by the bottom 90 percent of Americans combined.

Trump had been planning to campaign on the benefits voters were receiving from tax refunds. But some of the benefits are being eroded by surging costs associated with the Iran war. Nor is this about to change.

Trump’s 2027 budget proposal calls for boosting total defense discretionary spending from $1 trillion to $1.5 trillion, which he contends means “It‘s not possible for us to take care of day care, Medicaid, Medicare … while we’re fighting wars.” 

The big question is whether Trump can swing public opinion in his favor ahead of the midterm elections. 

I think it will be difficult. One reason is that presidents are subject to the vagaries of the economy and markets. Voters credit leaders when times are good and punish them in bad times, even if they have little to do with the outcome. During Trump’s first term, he benefitted when inflation was low in the U.S. even though it was low around the world. His popularity sank when the economy nose-dived as the pandemic struck. 

An important difference today is that the rise in inflation, slowdown in hiring and unhappiness with cutbacks in government programs are more closely tied to Trump’s policies. He is reluctant to acknowledge this. Nor do his economic advisors have the clout to convince him to shift course when prospective voters do not share his priorities.

Finally, the latest slide in Trump’s polling is related to unpopularity with the Iran war.  The best that can be hoped for in these circumstances is a quick end to the conflict and a permanent reopening of the Strait of Hormuz through diplomacy. Even then, oil prices may remain above their pre-war level until next year, as Energy Secretary Chris Wright has acknowledged. 

Meanwhile, voters may view the Iran war as a bigger policy mistake than Biden’s chaotic withdrawal of American troops from Afghanistan. 

Nicholas Sargen, Ph.D. is an economic consultant and is affiliated with the Darden School of Business. The second edition of his book “Global Shocks” is forthcoming. 

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