Trump’s Second Term Economy: Stable Yet Vulnerable
Here’s a summary of how the U.S. economy is performing in 2025 under Donald Trump’s second term (as of late 2025), followed by an assessment of whether it’s improving, stagnating or deteriorating. I’ll stick to the data and remain neutral.
Current economic fundamentals
Growth (GDP): According to the Bureau of Economic Analysis (BEA), real U.S. gross domestic product (GDP) grew at an annual rate of 3.8 % in the second quarter of 2025 (April–June).
Bureau of Economic Analysis
By contrast, in the first quarter of 2025 the economy had declined (‑0.6 %).
Bureau of Economic Analysis
. A forecast from the The Conference Board suggests GDP growth for the year may come in at only 1.6 %, reflecting slowing momentum.
The Conference Board
Inflation: As of September 2025, the Headline Consumer Price Index (CPI) rose about 3.0 % year‑over‑year; core inflation (excluding food & energy) was around 3.0 % as well.
U.S. Department of the Treasury
The personal consumption expenditures (PCE) index — the Fed’s preferred measure — was about 2.7 % year‑over‑year.
U.S. Department of the Treasury
Consumer & business indicators: The Conference Board’s Leading Economic Index (LEI) dropped 0.5 % in August 2025 and showed a faster decline over the prior six months, signalling headwinds to near‑term activity.
The Conference Board
Business investment remains positive, especially in equipment and intellectual property, though structural investment (e.g., in buildings) is falling.
Deloitte
Trade and international position: The U.S. current‑account deficit narrowed in Q2 2025 to about 3.3 % of GDP (from 5.9 % in Q1).
Bureau of Economic Analysis
Meanwhile, the U.S. net international investment position (assets minus liabilities) remained deeply negative (‑$26.14 trillion at end of Q2).
Bureau of Economic Analysis
Employment and incomes: Personal income increased modestly in August 2025 (0.4 % monthly), and personal consumption expenditures rose 0.6 % monthly.
Bureau of Economic Analysis
In general the labour market remains relatively resilient, though some indicators (like average weekly hours in manufacturing) are weakening.
The Conference Board
Housing and residential investment: Housing starts are up on a year‑earlier basis (e.g., +12.9 % in July) but housing permits are down (‑5.2 % year‑over‑year in July) and mortgage rates remain elevated (~6.7 %).
Deloitte
Policy, tariffs & external risks: Tariff pressures and trade uncertainty are major headwinds. The LEI report explicitly mentions higher tariffs as a major drag on growth.
The Conference Board
Is the economy getting better, stagnating or getting worse?
Putting it all together: the picture is mixed, with some strengths but also notable slowdowns and risk factors. If I were to choose between “better”, “stagnant” or “worse”, I would lean toward stagnating (with risk of turning worse) for the following reasons:
On the positive side: a 3.8 % growth rate in Q2 is a strong reading relative to many forecasts. Also, inflation has come down from earlier highs, which helps purchasing power. Some components (consumer spending, business investment in tech/intellectual property) remain solid.
On the less positive side: The outlook is weakening. The LEI is declining, signalling that future growth may slow. Real GDP forecasts for the full year are modest (1.6 % by The Conference Board). Tariffs, high interest rates, housing weakness and international risk threaten to undermine momentum.
So, while things aren’t collapsing (i.e., I wouldn’t say “getting significantly worse” yet), they’re also not clearly accelerating or improving strongly. The economy is holding its ground but shows signs of losing steam.
Key risks and caveats
The high Q2 growth may be partly driven by one‑off factors (e.g., import declines which boost GDP by subtraction) rather than purely robust domestic demand. The BEA noted the Q2 growth “primarily reflected a decrease in imports … and an increase in consumer spending”.
Bureau of Economic Analysis
Data are subject to revision, and future quarters matter a lot. If momentum continues to slide in consumer spending or business investment dips, the economy could slip into contraction.
External risks (trade wars, tariffs), policy uncertainty, and global slowing all weigh. The forecast environment is certainly more cautious.
Regional and sectoral variation matter: Some states and industries are much stronger than others (BEA noted 48 states grew in Q2, but some only modestly).
Bureau of Economic Analysis
In my view (staying objective): the 2025 U.S. economy under the second Trump term appears to be holding steady but slowing. It shows resilience in certain areas, but underlying indicators point to a deceleration in growth. The risk is that the economy could tip toward “getting worse” if the headwinds outweigh the strengths.
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