The longest State of the Union Address in modern times was delivered by President Trump, who spoke for just over 1 hour 48 minutes.
He said that America was “bigger and better than ever” and “the US economy is roaring as never before.”
Data says one thing and the US president another. But voters will have their own opinions.
Inflation isn’t rising. The US stock market has reached record levels, and mortgage interest rates are down.
The president is now rated below 40%. Why is this disconnect happening?
Solid economics on paper
According to conventional measures, US economic stability is a fact. In 2025, the consumer price index ranged between 2.4% and 2.7% depending on how it was measured.
On an annualised three-month basis, core inflation reached 1.7%. The price of gas has fallen to about $2.95 per gallon from $3.12 on Inauguration day.
Treasury yields are down, and mortgage rates have fallen to their lowest level since 2022.
The growth rate slowed down in the last quarter of 2018. In 2025, the number of jobs created will be around 181,000. The unemployment rate is higher now than it was a year earlier.
Conference Board’s labor market differential, which is a measure of the difference between those who believe that jobs are easy to come by and those who think they are hard to find, has declined.
This does not indicate a collapse of the economy. Instead, it indicates a cooling with stable asset markets and slower household growth.
What makes voters think they are worse off than the statistics?
It’s not about rates, but rather levels. The inflation rate may be less than it was in 2022 but the prices of groceries, rents, utilities, and insurance are still high.
Even a 2.4% CPI rise still adds to an already high base. This is what many families are experiencing.
This tension is captured in polling. Reuters and Ipsos both show that 40% of Americans approve of Trump’s economic management. AP NORC found 36%.
Cook Political Report’s average shows that 41% of Americans approve, while 57% are disapproving.
A survey by Economist YouGov shows that 69% of respondents rated the economy as poor or fair, while half said it was getting worse.
Investors often follow inflation and earnings trends, whereas voters monitor rent receipts and groceries. These two timelines no longer match.
Promise gap
Trump had promised to lower the cost of groceries and energy during his campaign. He declared the economy to be booming in his State of the Union address and that millions of people were benefiting from the rising market and the lower interest rates.
Although the rhetoric has been expansive, delivery of the message was more modest.
Food prices increased 2.4% during the first year in his second term, despite the fact that inflation is lower than its previous peak. The cost of mortgages has decreased, partly due to bond markets pricing slower growth.
In reality, however, the economic growth has slowed down from its post-pandemic peak.
Many of the angry reactions are due to the gap between what was promised and what happened.
Housing and healthcare affordability are still unresolved, despite the fact that labor markets remain strong.
Approval ratings are more likely to be affected by the difference between expectations and the reality than data when the expectation gap is large.
Taxes, courts, and the growth risk
How people view trade policy has a direct impact on their daily lives.
The Supreme Court has struck down Trump’s most extensive tariff regime.
He called it a bad decision and promised alternative measures. The president has consistently argued that foreign countries pay tariffs and they could replace income tax one day.
The majority of economic studies have concluded that US consumers and firms are responsible for the bulk of tariffs. Tariffs are a kind of tax on imported goods.
Treasury yields have declined due to concerns over trade tensions, slower growth and lower Treasury yields. Other words, the financial ease cited by the speaker reflects caution on bond markets and not a renewed expansion.
This mix can be confusing for investors. Earnings and liquidity are important to equity markets. The response of households to job security and cost is a good example.
Uncertainty in the trade market can boost bonds, while reducing business confidence. This divergence contributes to the perception gap.
Voters rewrite history
Survey methodology may be more informative than inflation or GDP.
All of the pollsters that recorded 2024 votes immediately after election find out now that about 6% (or 6,000) Trump voters have denied voting for him.
Nearly one-fourth of Trump voters disapproving his performance no longer acknowledge their initial vote.
Both directions are affected by the pattern. Harris voters that now support Trump will be more inclined to say they voted him. This is called preference reconciliation by researchers. Memory is adjusted to match current emotions.
It’s more than just statistical noise. Voters who begin to dissociate themselves from a sitting incumbent are indicating deterioration in their reputation. A rating below 40% is a warning sign. Another warning is when supporters rewrite their votes.
This midterm is math
In 2010, Barack Obama lost 60 House seats in the midterm elections.
Today, Republicans have a very thin majority. In several polls, independent voters have shown disapproval levels above 60%.
A Wall Street Journal survey found that 56% of respondents said the president did not set the right priorities and 58% were dissatisfied with his handling of the inflation.
State of the Union addresses rarely have a long-lasting impact on numbers. These speeches can help clarify strategies. The one I chose was more based on patriotism and optimism than it was on empathy. This approach can energize a group. This approach may not be able to expand a group.
Investors are not at risk of a recession on the horizon. Political constraint is the risk. The risk is political constraint.
Stability is a key to market success, but policy insecurity and reactive governance can be a challenge.
US economic crisis is non-existent. Yet belief in economic stewardship is eroding. Politics tends to follow the numbers when confidence drops faster than economic growth.
As updates occur, this post Trump says it’s a ‘golden era’ but the grocery bill forces voters to disagree.
