Inflation and high costs weigh on U.S. voters ahead of midterm elections

Affordability is the dominant concern for American voters as midterm elections approach on Nov. 3, with inflation and high living costs putting continuous pressure on household budgets. The Republican Party, holding narrow majorities in the House and Senate, is vulnerable to voter backlash over economic conditions under President Donald Trump's second term. Polls indicate many Americans are dissatisfied with Trump's handling of the economy, and the election results will serve as a key indicator of public sentiment toward his administration. While the presidency is not on the ballot, control of Congress hangs in the balance.

Annual inflation measured by the consumer price index reached 3.7 per cent in September, a significant increase from the 2.4 per cent rate recorded in February. The ongoing conflict with Iran has driven up gas prices and played a major role in this acceleration. Additional upward pressure on prices has come from tariffs implemented by the Trump administration. To combat inflation, the Federal Reserve increased its benchmark interest rate in September to a range of 3.75 to 4 per cent, acting against the president's calls for lower borrowing costs. Further rate increases are anticipated by economists in the months ahead.

Gasoline costs were responsible for more than half of the overall price increase in September, rising 9.1 per cent that month. National average gas prices have surged by over 45 per cent since the U.S.-Iran conflict began in February. A New York Times survey found that "more than 40 per cent of Republicans disapprove of how Trump has handled gas prices." The president's 2024 promise to lower fuel costs has been contradicted by the military action, which led to the closure of the Strait of Hormuz, a critical passage for global oil shipments.

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For the sixth month in a row, wage growth has failed to outpace inflation, eroding purchasing power for American workers. Average hourly earnings increased by 3 per cent in September compared to a year earlier, falling short of the 3.7 per cent inflation rate. This marks a reversal from earlier in Trump's term and during the 2024 election, when wages were rising faster than consumer prices. The sudden inflation spike that began in March has quickly diminished workers' real income gains.

Housing costs are also climbing, with the average rate for a 30-year fixed mortgage jumping to 7.36 per cent in October. This is the highest level since October 2023, which was itself a two-decade peak. Rising bond yields, partly driven by concerns over high government deficit spending, are influencing mortgage rates. In June, Congress passed the 21st Century ROAD to Housing Act, a bipartisan effort designed to boost housing supply and restrict large corporate investors from buying single-family homes.

The price of a new vehicle remains raised, costing 22 per cent more on average now than it did six years ago. Prices peaked in 2023 and have since stabilized, but they have not fallen back to pre-pandemic levels. Trump's tariffs on Canadian auto and steel imports, enacted in April 2025, have had a muted direct impact on consumer prices so far. Since those tariffs took effect, the average price of a new vehicle has increased by only 0.5 per cent.

Public opinion surveys reflect widespread financial anxiety. The University of Michigan's Survey of Consumers found about 55 per cent of respondents said they were worse off financially than a year ago. A separate poll by the Associated Press-NORC Center for Public Affairs Research showed "65 per cent of respondents blamed Mr. Trump's policies for the rise in prices, while 44 per cent continue to blame former president Joe Biden." Trump previously won the presidency in 2024 by capitalizing on voter frustration with inflation under the Biden administration.

With files from The Globe and Mail