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As the midterm elections approach, voters are poised to evaluate Donald Trump’s presidency through the lens of economic performance, particularly against the backdrop of the ongoing conflict in Iran. While recent data indicates a growth spurt in the U.S. economy, rising costs driven by global energy disruptions are likely to weigh heavily on the minds of Americans come November.
Economic Growth Amid Turbulence
In the first quarter of 2026, the U.S. economy demonstrated resilience, expanding at an annualised rate of 2%. This growth is particularly noteworthy following a slowdown in late 2025. The latest statistics suggest that, despite the turmoil created by the Iran conflict, which has led to higher tariffs and energy prices, consumer spending has remained relatively stable, with a 1.6% increase in consumption.
Economists attribute this uptick largely to significant investments by technology companies, particularly in artificial intelligence. James Knightley, chief international economist at ING, noted that as consumer spending begins to cool, the surge in tech-related investments appears to be the primary driver of growth in the current economic climate.
Rising Costs and Consumer Concerns
However, as November’s elections draw closer, it’s clear that many voters are more concerned about their immediate financial situations than broader economic indicators. The conflict in Iran has caused oil prices to spike sharply, with Brent crude reaching a four-year high of $126 per barrel before settling back to around $111. This surge has translated into a painful increase at the pump, with petrol prices soaring from less than $3 per gallon in February to $4.30 by the end of April, according to the American Automobile Association.
This dramatic rise in fuel costs has contributed to a significant uptick in inflation, with March’s annual rate hitting 3.3%, the highest in nearly two years. Such economic pressures are likely to influence voter sentiment significantly, as many Americans grapple with the realities of increased living costs.
Interest Rates Remain Steady
The Federal Reserve’s response to the inflationary pressures has been to maintain interest rates in the range of 3.5% to 3.75%. Prior to the onset of the Iran conflict, expectations had leaned towards a series of interest rate cuts. However, the escalation of costs stemming from the war has dashed those hopes for the foreseeable future.
The average interest rate for a 30-year mortgage has seen a rise from 5.98% to 6.3% since the conflict began, further complicating affordability for American homeowners. Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, has suggested that sustained high oil prices and ongoing geopolitical tensions could delay any potential rate cuts well into 2027.
Stock Market Resilience Amidst Challenges
Despite the broader economic challenges, the stock market has exhibited a degree of resilience during the ongoing conflict. Major indices, including the S&P 500 and Nasdaq Composite, have rebounded significantly, with the Nasdaq up approximately 10% since the conflict’s inception. The S&P 500 has risen by around 5%, while the Dow Jones Industrial Average has seen a modest increase of just over 1%.
For investors and those with pension plans tied to the stock market, this recovery offers a welcome reprieve. However, as Republicans brace for the upcoming elections, the overarching concern remains: will the positive economic indicators be enough to overshadow the pressing worries of rising living costs for the average voter?
Why it Matters
The economic landscape is a critical battleground for Trump and his Republican Party as they approach the midterms. While growth figures and stock market rebounds may provide some political ammunition, the harsh realities of inflation and rising costs are likely to dominate voter concerns. The outcome of the elections could hinge on how effectively the administration addresses these economic pressures in the coming months, especially as the situation in Iran continues to evolve. For many Americans, the cost of living will not just dictate their day-to-day choices but also their political ones as they head to the polls.
