Why a booming economy is not helping Trump 

Financial Times Europe 5 Oct 2026 Ruchir Sharma

 An Amer ican pres id ent’s party nor mally loses ground in midterm elec tions but this year is unusual. Eco nomic growth accel er ated sharply to near 4 per cent in the third quarter, yet Don ald Trump’s approval rat ing is plum met ing, par tic u larly on the eco nomy. His party is haem or rhaging sup port. Should it lose both houses of Con gress next month, which bet ting mar kets see as a live pos sib il ity, it would be the first such defeat in eco nomic con di tions this favour able since the 1950s. How could this hap pen? For many Amer ic ans, this feels like the wrong kind of boom — marred by a rising cost of liv ing and the fact that growth is driven mainly by the wealth i est con sumers and by heavy invest ment in AI, which the elect or ate has come to hate and fear more intensely than any pre vi ous tech break through.

 Frus tra tion with the US eco nomy pred ates both AI and Don ald Trump’s second term. Most Amer ic ans have been increas ingly dis sat is fied about the state of the nation for dec ades, but the share who say the coun try is head ing in the right dir ec tion col lapsed over the past year from around 40 per cent to 20 per cent. The big source of dis may: afford ab il ity. The share of voters who cite cost of liv ing as the most import ant issue has risen six fold in recent years to a record high, over 25 per cent. And it is clear which prices are caus ing the most griev ance: hous ing and energy, with the Iran war restrict ing oil sup plies and AI rais ing demand for elec tri city. In the last year, pet rol prices are up more than 40 per cent, and over all con sumer prices have been rising at well over 3 per cent. 

With mort gage rates now top ping 7 per cent, US hous ing is less afford able than at any point in the past two dec ades. There is a wide spread per cep tion that power-hungry data centres are push ing up util ity bills. Nine in ten Amer ic ans do not want one in their town, and most of these projects face local oppos i tion. It’s hard, however, for Repub lican con gres sional can did ates to address these con cerns when their pres id ent says slow ing data centre con struc tion would leave the US “back wards and poor”. Unsur pris ingly, AI is the first widely hated product of the digital age. In earlier dec ades, a major ity of Amer ic ans saw com puters and the inter net as big pluses for soci ety. Now most say they are “more con cerned than excited” about AI. 

Anxi ety is rising most sharply among people in their twen ties, who are increas ingly wor ried about a job less future. By ask ing voters to accept higher prices as the cost of his war in Iran, and AI as the cost of stay ing ahead of China, Trump is fight ing against the national mood. The con sist ent mes sage from the White House and many Con gres sional Repub lic ans is: learn to love AI, we need it to com pete with China. It’s an odd lec ture com ing from a party that won the White House and Con gress by bash ing glob al ist elites. Broad GDP growth can fail to cap ture what people feel. Pop u lar dis con tent reflects more gran u lar details, like the fact that wage growth, adjus ted for infla tion, has turned neg at ive in recent quar ters. One key excep tion is work ers with AI skills, who com mand wages up to 120 per cent higher than their peers. 

So the sense of Amer ica as a land of haves and have-nots has an AI twist. Invest ment is grow ing around 25 per cent a year in AI-related indus tries, but by less than 1 per cent in other indus tries. Con struc tion is con tract ing on aver age but grow ing at a double-digit pace for data centre projects. This tide of money is lift ing other busi nesses only if they find an AI angle — think of the Japan ese toi let maker that saw its stock price jump after it star ted pro du cing ceram ics for com puter chips. Now, on days when the stock mar ket goes up, nearly half of the stocks go down — an unpre ced en ted phe nomenon. 

Most voters have reas ons to feel left out of the blessed AI circle. The wealth i est own the most stocks, and the mostly AI-driven gains are rising this year, cre at ing a reverse Robin Hood effect. The 0.1 per cent are gain ing more than the 1 per cent, who gain more than the 10 per cent, and so on down the income lad der. Sim il arly, mort gage delin quency rates are rising on a slid ing scale, fast est in the least wealthy neigh bour hoods. Since the second world war, a boom ing eco nomy has ten ded to cap midterm losses for the pres id ent’s party. His tor ic ally, when growth has accel er ated towards 4 per cent before an elec tion, the incum bent rarely lost con trol of either house of Con gress and lost con trol of both just once, in 1954. Should the Repub lic ans get swept aside this year, Trump — who rebuilt the GOP as a ves- sel of anti-incum bent anger — will have turned his party into a tar get. The writer is chair of Rock e feller Interna- tional.

 His latest book is ‘What Went Wrong with Cap it al ism’