Dr. Jack Rasmus, copyright 2026
“Trump’s 2026 State of the Union speech was historic—but only in the sense of the longest ever at 1 hour and 47 minutes. Apart from that, the speech was one third misrepresentations about the state of the American economy followed by more than an hour of pure political theater which has come to increasingly characterize presidential SOTU addresses in recent years.
The misrepresentations of the state of the economy covered topics like inflation and cost of living, record stock market prices and asset wealth creation, his $5 trillion tax cuts almost all of which have accrued to corporations, businesses and investors, and his tariffs which have little to do with trade or economics and everything to do with raising revenue for defense spending and political intimidation of other countries.
Jobs
Treated very briefly in passing was the topic of jobs. Trump’s avoidance of the topic is understandable—given that this past year the US economy has created a total of only 181,000 jobs; i.e. barely 15,000 jobs month, a level which isn’t even sufficient to provide employment for new entrants to the labor force which ordinarily averages at least 100,000 every month.
On the topic of jobs, Trump also made no mention whatsoever of the current unemployment level. When including involuntary part time, temp, and discouraged workers, as well as full time employed, per the government’s own estimates unemployment has been averaging around 8%. That’s more than 11 million US workers jobless! Moreover, even that 8% number excludes the 10 million workers who are self-employed independent contractors which government statistics conveniently ignore by classifying them as business owners, not workers. So the actual unemployment number of unemployed is thus at least 10% when properly estimated.
Trump made passing reference to the fact that the 181,000 jobs created were 100% in the private sector—without indicating the number of course. Nor did he bother to mention that he managed to fire 27,000 federal government workers. It’s true, as he said, the US economy is at the highest employment levels ever in 2025—by 181,000 jobs of course.
Economic Growth
Another economic topic, this time completely unmentioned, was the overall real growth of the economy in 2025. Measured in Gross Domestic Product terms, GDP, the most generally accepted indicator, the US economy grew only 2.2% in all of last year! That’s down from 2.4% in 2024 before he was elected. More ominous, in the last three months of 2025 the economy slowed rapidly even more to only 1.4%. And it was actually even much slower, since the inflation adjustment used by the government, called the Personal Consumption Expenditure (PCE) price index notoriously underestimates inflation which, in turn, boosts the reported GDP numbers. If properly inflation adjusted, actual GDP in 2025 was closer to 1% than even the reported 2.2%.
Nevertheless, Trump on several occasions bragged “we’re the hottest country in the world!”
As for future economic growth Trump continually says other countries have promised to invest $18 trillion in the US economy! But virtually all of that are just verbal pledges, mostly designed no doubt to placate Trump during negotiations over tariffs. It’s difficult to see how the Europeans, Japanese and others—all of whose economies are either in recession or stagnant—are going to invest that amount in America’s economy instead of their own.
Inflation
Trump did spend some time repeatedly claiming that inflation was reduced dramatically during his first year in office. More than once he proclaimed “inflation is plummeting”. He referenced what is called ‘core’ inflation in the PCE price index, which conveniently excludes food prices, housing costs, mortgage rates, and all other kinds of interest rates on autos, credit cards, and other loans—all of which rose last year.
And there was a big problem with the PCE price-inflation index, whether ‘core’ or what’s called ‘headline’, which includes food and energy prices.
Readers might think the PCE is constructed by the government going out and surveying a large sample of the millions of goods and services in the economy. It doesn’t. It takes a conglomeration of other surveys and estimations performed by the US Labor and Commerce Departments, puts their results together somehow, adds assumptions of its down, employs questionable methodologies, and comes up with a number that grossly underestimates actual prices in general. And here’s a bigger problem with the PCE in 2025. In the fourth quarter of 2025 the government shut down for six of the twelve weeks in the October-December period. During that period there were no surveys done by either the Labor or Commerce departments on which the PCE could be based. So half of the quarter had no data available at all. That didn’t stop the government from making up number for the six weeks that it just plugged in the missing six weeks. It said it ‘imputed’ the data. In translation it means it just made up the numbers to smooth out the twelve weeks’ results.
The PCE is also notorious for deriving prices from non-price data. For example, it doesn’t actually ask insurance companies how much they raised their prices last year. It takes their profits (which they conveniently underestimate in order to pay lower taxes) and it ‘derives’ the industry prices from their profits! There’s scores of such questionable methods employed. And remember, no housing prices, no mortgage rate hikes, and no higher interest charges of any kind.
Trump said nothing in his speech about the huge price hikes now penetrating the economy as a result of the cuts to Medicaid and ACA subsidies. Consumers now have to absorb the huge cost increases if they want to continue prior levels of medical insurance coverage. Many won’t. But none of the loss of subsidies will be counted as price increases or be reflected in the PCE.
Stock Markets
Trump always likes to brag that the stock market is doing so great. And it is true that the three main US stock markets—the DOW, S&P 500, and Nasdaq—all hit record levels in 2025. And then they began crashing in 2026 and have all continued to trend down. Why? Because in 2025 they were almost all pumped up by speculative investing in the Artificial Intelligence bubble. In recent weeks, investors have begun getting cold feet about AI, however. The big & tech companies have been pouring hundreds of billions into developing AI but it is becoming increasingly clear to investors they may not be able to recoup the profits on the over-investing. AI is also threatening to undermine the profits of other tech, banks, transport and other companies. So their stock prices are falling as well.
The cryptocurrency markets are now in even greater freefall. The only game that is ‘hot’ is gold and silver. And their escalating rise is the result of Trump/US sanctions, tariff policy, and the devaluation of the US dollar which is now exceeding 10% so far since Trump took office. The US dollar is not doing so good but Trump said nothing about that. If it’s hot, it’s a ‘hot potato’ that other countries are dumping.
Taxation
Trump has been touting his $5 trillion 2025 tax act which his Republican run Congress quickly passed as the first measure out of the box last spring 2025. Half of the $5 trillion wasn’t even new, however. It represented Trump’s 2018 $4.5 trillion package of tax cuts, more than half of which were for large corporations. In 2018 those tax cuts were made permanent forever and didn’t even come up for renewal in Trump’s 2025 tax package. So no net new tax stimulus from that.
What was up for renewal in 2025 were proposals for small business and individuals. The small business provisions were sweetened even more compared to 2018. So were the individual income tax cuts that benefit mostly those with incomes over $250,000 a year.
When touting his 2025 tax bill Trump likes to remind us, and he did again in his speech, that he cut taxes on tips, overtime pay, and social security. But even a brief summary of those provisions in the 2025 tax act reveal something far less. It doesn’t mean no tax on all tips. For example, a worker making $50K/yr and earning $5k on tips will get a tax deduction of only $600. The no tax on overtime pay is capped at only $12k/yr. And the so-called no tax on social security income is a big misrepresentation. It was reduced by Trump’s Congress to a tepid $6k additional tax deduction not an elimination of any tax on social security income. Moreover, all these so-called working class tax cuts phase out completely by 2028—in contrast to the corporate, business, and wealthy individual tax cuts were are now permanent forever!
Trump may be right when he calls his 2025 cuts “the largest tax cuts in history”, but it’s the largest for investors, corporations and businesses with a small token crumb thrown at American workers and all packaged in a heap of misrepresentations and outright lies.
Since 2001, by the way, presidents and Congresses of both parties have passed tax cuts totally more than $20 trillion, eighty percent of which have accrued to businesses and the wealthy.
That $20 trillion contributed significantly to the US economy’s 2025 $1.77 trillion US budget deficit and the US national debt rising from around $36.5 trillion when Trump took office to its current level just shy of $39 trillion. The other major contributions to those deficits and debt are the $9 trillion spent on wars, the Pentagon’s now $1 trillion/yr war budget, and the $1.2 trillion now paid annually to investors in US Treasury securities to pay interest on that debt. No mention of that either, of course. Or that his budget deficit in 2025 was virtually the same as Biden’s $1.8 trillion in 2024! Not a word in his speech about the out of controls annual deficits and debt. Yes, the US economy is ‘hot’, as in the barn is about to burn down hot.
Tariffs
Trump spent some time hyping his tariff policies. He bragged how his tariffs have brought in hundreds of billions of dollars of new revenues—the exact number he avoided citing since it appears, per the recent Supreme Court decision, he’ll have to give some of that back.
One would have thought he’d say something about how tariffs have reduced imports and thus reduced the USA’s annual almost $1 trillion trade deficit. But he didn’t. Why? Because the tariffs haven’t reduced that trade deficit all that much. They’re not about trade or trade deficits. The tariffs are about raising revenues for a government running $1.8 trillion budget deficits and in desperate need of new revenue sources since it’s simultaneously cutting tax revenues—and it needs to raise more funds to pay for its accelerating defense-war costs. Total US war-defense costs, not just Pentagon spending, are now running $2.1 trillion a year. And Trump says he wants to give the Pentagon, now at $1 trillion, another $400 billion for weapons in his 2027 budget. Tariffs are thus about ‘shaking down’ US allies and the rest of the world economy to generate more US government revenue to pay for tax cuts and more war spending.
Tariffs are also a tool for intimidating foreign governments to ‘toe the line’ on US foreign policy. In that sense, they are an addition to US sanctions policies which haven’t worked all that well in that regard in recent years.
Trump’s tariff policies are all over the map. They are causing real economic strain for many US small businesses and farmers who are losing markets and revenues, as well as to some extent to consumers whose prices for goods imports are rising.
It is true that Trump has raised the average rate of tariffs on imports to the US from a previous 2.4% to around 13%. And those who think legislation or the Supreme Court will prevent him from raising them further are naively mistaken. His vision is tariffs are the economic panacea for all that ails the US economy. As he put it at one point, obviously departing from his prepared speech, he wants tariffs to someday even replace the individual income tax!
That will mean a regressive de facto sales tax on goods imports of at least 30%. At that level, domestic US producers will have sufficient cover to raise prices on US produced goods by at least 10% on average. Double digit chronic inflation anyone?
These were the main economic measures Trump addressed. When considered in more detail, Trump’s touting of the US economy’s performance in 2025 amounts to misrepresentation at best, and outright lies in most cases.
The US economy is not robustly growing but slowing. Jobs are barely being created. Inflation is nearly twice that reported by the PCE index, which is over-inflating US GDP in turn. The stock market bubbles of 2025 have begun unwinding, the AI hype has peaked, and the US dollar devaluation is accelerating and the worse since the 1970s. The US budget deficits and national debt continue surging out of control and interest payments to rich holders of US Treasury securities are escalating past $1.2 trillion a year! The tax cuts of 2025, like those of 2018, will provide little if any real stimulus to the economy and the working class cuts are a sham of what’s claimed. Pledges by other countries to invest in the US aren’t worth the verbal assurances given or the paper they’re written on, if in fact they were written. Tariffs are about raising revenue and political intimidation of allies and the rest of the world alike. They are a reflection of the fact the US empire is running short of funds and is searching for radical funding alternatives in lieu of economic growth or debt financing now approaching its limits. Tariffs in turn are upending global supply chains and global trade and will lead to other countries’ turning further away from the US dollar, thus ensuring its further devaluation.
In short, the Trump economy and the USA is ‘hot’ only in the sense it is becoming domestically, and globally, an internal combustion engine heating up as result of insufficient coolant. And when engines become so ‘hot’, their mechanical working parts eventually just freeze up.
About the Author
Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He publishes at Predicting the Global Economic Crisis.
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 