Six months into President Donald Trump’s second term, economists say the middle class is holding steady but facing mounting pressure.
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Inflation remains elevated, new tariffs are raising prices on everyday goods and wage growth has slowed. As a result, many households are cutting back, saving more and delaying major financial decisions.
GOBanking Rates spoke with two economists to understand where the middle class stands now and how today’s economic trends could shape their financial future.
Inflation and Tariffs Are Squeezing Budgets
Middle-class households are under pressure from persistent inflation and new tariffs. Even with inflation holding around 3.5%, rising prices on everyday goods are forcing tough decisions.
The latest round of tariffs, implemented under Trump’s renewed trade agenda, has added to the squeeze.
“Middle-class households are adapting through pragmatic trade-offs, cutting discretionary spending while favoring value-based purchasing as they navigate 3.5% annual inflation, rising tariffs on key imports and a cooling but still tight labor market,” said Sean Jasso, economist at Pepperdine University.
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Households Are Delaying Big Purchases and Saving More
In response to economic uncertainty, many middle-class families are shifting their financial behavior, such as cutting back on large expenses and increasing their savings.
“We’re seeing a cautious shift where middle-class families are increasing savings rates back to 5% while pulling back on big-ticket items and delaying investments,” Jasso said.
The shift in behavior reflects growing uncertainty under Trump’s economic agenda.
Wayne Winegarden, economist at the Pacific Research Institute, said that some families may have accelerated spending earlier this year to get ahead of rising costs. “That relief comes at the expense of future growth,” he added.
Why Middle-Class Incomes Aren’t Keeping Up
Economic growth has been weak in the early part of 2025 and income gains aren’t keeping pace with inflation.
In addition, economists noted that the Trump-era deregulation and entitlement reform could exacerbate these long-term risks.
“The latest jobs report shows that the employment market has been weak, inflation continues to persist and inflation-adjusted disposable income is growing slowly,” Winegarden said. “Broad-based economic growth for the first half of the year is weak.”
Winegarden said recent economic trends under the Trump administration point to continued pressure on working households.
“While the data is backward looking, the rising tariffs and growing business uncertainty portend continued problems for the middle class going forward, especially with respect to the cost of living,” he added. “Taken as a whole, these trends indicate that the middle class is barely holding on and is likely losing ground economically, a pessimistic story to be sure.”
Wealth Gaps and Retirement Security Are Top Concerns
Even as middle-class families adapt in the short term, economists are watching deeper trends that could impact long-term financial stability, particularly those related to wealth inequality and retirement planning.
These issues have become more urgent as the Trump administration continues to emphasize market deregulation and entitlement reform, according to the White House.
“The most critical trend is the growing concentration of wealth, where the top 10% now control 66% of household net worth,” Jasso said. “This raises long-term concerns over retirement security and upward mobility for the broader middle class.”
Winegarden said weaknesses in the housing market and underfunded pensions pose long-term risks for the middle class.
“Much of a middle-class family’s wealth is in real estate,” he said. “The current weakness in the market and regulatory burdens are disconcerting.”
In addition, Winegarden said that underfunded public pensions and Social Security could trigger a major funding crisis without reform.
What Middle-Class Households Should Watch Next
As economic pressures continue, experts advise middle-class households to pay close attention to federal policy changes, particularly those affecting trade and interest rates, as reported by Reuters.
Both are central pillars of Trump’s second-term economic strategy and even small shifts could ripple through household budgets.
“Middle-class households should stay attuned to how policy shifts, especially on interest rates and trade, directly impact their cost structures and savings capacity in ways that are often underestimated,” Jasso said.
With affordability challenges still in place, small policy changes can have a significant impact on financial stability, especially for families already operating on tight margins.
“Going forward, there will not only be the inevitable payback from the accelerated consumption, but families will also now have to face the higher costs,” Winegarden said. “The result will be continued economic weakness.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m an Economist: This Is Where the Middle Class Stands 6 Months Into Trump’s Presidency
