US Economy Shows Record Income Growth in 2025, Yet Public Pessimism Persists
Despite record-breaking US median household income and falling poverty rates in 2025, public dissatisfaction with the cost of living remains exceptionally high, creating a major political challenge for the administration.
The US economy experienced a solid year in 2025, according to data released by the US Census Bureau. Real median household income rose by 2.6% over the year, reaching $87,460 annually, the highest level recorded since government data collection began in 1967. Meanwhile, the official poverty rate dropped by half a percentage point to 10.2%, the lowest level ever measured in the series, with approximately 34.5 million Americans living below the poverty line.
For the Donald Trump administration, these figures arrived at an opportune moment. They were published as Treasury Secretary Scott Bessent testified before a House committee on the state of the economy, and President Trump was quick to present them as uncomfortable facts for his Democratic opponents.
The Disconnect Between Macro Data and Public Sentiment
Despite the positive macroeconomic indicators, public sentiment tells a sharply contrasting story. A Reuters/Ipsos poll showed that 74% of Americans believe the cost of living is moving in the wrong direction, while only 13% think it is on the right track. Similarly, a Washington Post survey found that 59% of respondents believe people like them and their families have little chance of improving their living standards.
This pessimism is not limited to low-income households. More than half (56%) of households earning over $100,000 annually reported that food prices remain out of reach, a figure that surges to 82% among households earning less than $50,000.
"If a product goes up from $10 to $12, and inflation subsequently slows down, the price does not return to $10. It simply starts rising at a slower pace," economic analysts note, explaining why consumers continue to feel the squeeze.
Monetary Policy and Political Fallout
Adding to the economic friction, the war in Iran, a surge in energy prices, and renewed inflationary pressures have complicated the outlook. The Consumer Price Index rose by 3.4% in August compared to the previous year, and the rate on a new 30-year mortgage climbed back above 7%.
This places Federal Reserve Chair Kevin Warsh in a difficult dilemma. The Fed is widely expected to announce a quarter-point rate hike, bringing the benchmark rate to a range of 3.75% to 4%, in a bid to curb inflation at the risk of cooling the broader labor market.
