Trump shrugs off rising inflation as war deepens economic spiral

President Trump flew to Beijing on Tuesday under some of the darkest economic clouds of his political career, leaving behind a country reeling from the cost of everyday life.

Why it matters: The bottom is falling out on Trump's economic credibility — the central promise of his return to power. The inflation crisis that doomed his predecessor suggests he may not recover.

A new CNN poll found that 70% of Americans disapprove of Trump's handling of the economy — a benchmark that never crossed 50% in his first term, even during the pandemic.

• 77% of Americans, including a majority of Republicans, say Trump's policies have driven up the cost of living in their own community.

Driving the news: For now, Trump appears unconcerned, convinced that renewed inflation is temporary and that gas prices will plummet once he ends the Iran war.

• Asked before departing for China whether Americans' financial struggles were motivating his push for a deal with Iran, Trump replied: "Not even a little bit."
• "The only thing that matters when I'm talking about Iran is they can't have a nuclear weapon," he added. "I don't think about Americans' financial situation."

The big picture: The affordability crisis that fueled Trump's return to power has become a five-alarm threat to his presidency — even as GDP growth, fueled largely by the AI boom, remains strong on paper.

1. Prices are surging: Inflation spiked to 3.8% in April as the Iran war pushed the national average price of gas above $4.50 a gallon.

• Economists fear the energy shock is beginning to ripple through the broader economy, pushing up the cost of groceries, airfare, electricity and other essentials Americans rely on every day.

2. Paychecks are shrinking: Tuesday's inflation report showed that prices are outpacing wages for the first time in three years, erasing gains in real purchasing power.

• American households have absorbed a rise of nearly 30% in consumer prices since the pandemic — a cumulative toll that has never fully healed, Axios' Courtenay Brown reports.

3. Debt is mounting: Americans are increasingly leaning on credit cards and loans to absorb rising costs, with consumer borrowing posting its biggest monthly jump in March since late 2022.

• The personal savings rate fell to 3.6% in March, its lowest level since 2022, as lower-income households burn through savings to cover essentials.

4. Confidence is collapsing: Consumer sentiment has cratered to record lows as Americans grow pessimistic about the economy and their own financial futures.

• A new YouGov/Economist poll found that 59% say the economy is getting worse, while just 15% say it's improving. More than two-thirds of Americans say the country feels "out of control."

5. Main Street is souring: The National Federation of Independent Business says optimism around future business conditions and expansion plans has fallen to its lowest level since before Trump's reelection.

• Small businesses are often treated as an economic early-warning system because they're especially vulnerable to rising fuel costs, tighter credit and weakening consumer demand.

The other side: Despite Trump's public confidence, buoyed by a booming stock market, the White House is increasingly signaling it recognizes the political danger posed by rising prices.

• Trump this week endorsed suspending the federal gas tax, an emergency measure typically reserved for periods of acute consumer pain.
• He also urged the House to pass the bipartisan "21st Century ROAD to Housing Act," framing housing affordability as central to "the American Dream" after years of elevated mortgage rates and soaring home prices.

What they're saying: "While the President has been clear about short-term disruptions as a result of Operation Epic Fury, the Administration is focused on implementing the proven Trump agenda of tax cuts, deregulation, and energy abundance to keep America on a solid economic trajectory," White House spokesperson Kush Desai said in a statement.

• "As traffic in the Strait of Hormuz normalizes again, Americans will again see gas prices plummet, real wages grow, inflation cool, and trillions in investments continue pouring in."

What to watch: AtlasIntel, ranked among the most accurate pollsters of the 2024 election, found this week that Democrats are leading the generic House ballot 55% to 40%.

• Even more striking: Democrats now lead on every major economic issue tested, including the cost of living (+15), the economy (+17) and economic inequality (+20).
• If that shift hardens before the midterms, even the GOP's newfound redistricting edge may not save the House from a blue wave.