By Megan Leonhardt

President Donald Trump's state of the union speech on Tuesday night was the longest on record, but there wasn't a lot of time devoted to new economic policies.

As expected, Trump spent time during the speech touting his economic record, highlighting lower inflation, tax cuts and the potential for growth ahead.

"The roaring economy is roaring like never before, and our enemies are scared, our military and police are stacked, and America is respected again, perhaps, like never before," Trump said.

Here's what the speech contained and how it stacks up to what the economic data, earnings reports and consumer surveys are showing.

Affordability Remains Elusive, Despite Trump's Claims

One of the main goals of the Trump administration has been to lower the rate of inflation. Last night, Trump touted that he had achieved that, noting that inflation averaged 1.7% in the final three months of 2025.

"The Biden administration and its allies in Congress gave us the worst inflation in the history of our country, but in 12 months, my administration has driven core inflation down to the lowest level in more than five years, and in the last three months of 2025 it was down to 1.7%," Trump said.

The alternative measure of inflation, which the administration has used before, is based on the average of the annualized rates of monthly CPI growth during specific periods, for example from the start of Trump's second term or the final three months of the year.

That is different from official standard calculations. The Bureau of Labor Statistics calculates the change in the consumer price index compared with one year earlier. In January, inflation rose 2.4% year over year. Meanwhile the Federal Reserve's preferred inflation gauge, the Personal Consumption Expenditures Price Index, rose 2.9% in December, the latest data available.

By both of the official measures of inflation, price growth is still above the Fed's 2% target.

But the U.S. is "doing really well" on affordability, Trump said, noting that prices are "plummeting."

"The cost of chicken, butter, food, hotels, automobiles, rent is lower today than when I took office, by a lot, and even beef which was very high is starting to come down significantly," Trump said.

Specifically, the president called out the price of eggs, which he reported are down 60%. But according to the CPI, the average price of a carton of large Grade A eggs has fallen 48%.

Beef, on the other hand, is up substantially. Ground beef prices were up 22% in January from a year prior and the cost of steaks is up about 12%.

Gasoline prices, which Trump also highlighted last night, have fallen significantly over the past year. Prices at the pump are $2.98, on average, according to AAA. That's down from $3.14 a year ago.

Tariffs Will Stick Around

Trump didn't spend a lot of time discussing tariffs last night in the wake of the Supreme Court ruling on Friday that struck down the levies issued under the International Emergency Economic Powers Act.

The president did, however, note that the new 10% tariffs issued under Section 122 on Friday, are a "fully approved and tested" measure. "Congressional actions won't be necessary" to approve them, he said. In fact, Congress must vote to renew those tariffs in 150 days or they will expire.

Stifel's Chief Washington policy strategist Brian Gardner noted that Trump failed to push Congress to codify the recently struck-down tariffs, which could suggest that the White House recognizes that they're unlikely to be approved.

"There was no inflation, tremendous growth," Trump added of his tariff policy. But there's evidence that tariffs are increasing prices. In January's CPI data, overall core goods inflation was flat due to a huge drop in used car prices.

Taking that out of the equation, core goods excluding autos rose 0.36% month over month, a 4.4% annualized rate, according to Omair Sharif, founder of Inflation Insights. Prices in categories like household furnishings, personal care products and electronic devices such as computers, tablets, and smart home assistants all rose sharply in January.

"Trump gave no indication he would relent from his tariff agenda. Rather, as we surmised, broad tariffs would resume through other authorities, and foreign countries that have entered "voluntary" trade agreements are expected to stick with those agreements," writes Thierry Wizman, global FX and rates strategist at Macquarie Group. Wizman notes that for investors, he expects that the continuing tariffs will not be good for the dollar this year, same as last year.

Employment Remains Muted

Job growth has proven sluggish during Trump's first year in office. The U.S. added an average of roughly 24,000 jobs per month since the start of Trump's second term.

Yet Trump touted his jobs record last night. "More Americans are working today than at any time in the history of our country. Think about that: any time in the history of our country, more working today," Trump said.

That's not true. Unemployment has remained low by historical standards over the past year. The unemployment rate peaked at 4.5% in November, but slid to 4.3% in January, at least partly because the president's crackdown on immigration has reduced the number of people available to work. But the lowest unemployment rate in over five decades was 3.4%, which the U.S. achieved in January 2023 and again in April 2023.

Moreover, labor participation is nowhere near the best on record. In January, the labor-force participation rate was 62.5% in January. That's a far cry from the 67.3% peak hit in 2000.

Trump's claims about the country's growing need for manufacturing and construction jobs also didn't ring true. Trump specifically noted that his administration has added 70,000 new construction jobs "in just a very short period of time." But looking over the past year, construction has only gained about 44,000 net new jobs. Manufacturing employment has declined by 83,000 since January 2025.

The Promise of Economic Growth

At the top of Trump's list of economic accomplishments was his "One, Big, Beautiful Bill," the tax cut and spending law, which is expected to deliver increased tax refunds of $1,000 on average. But Anisha Steephen, fellow at the Roosevelt Institute, writes that for those earning below $100,000, the average increase is just $210. For those earning above $200,000, the average increase is over $2,000.

Trump spent much of Tuesday's speech talking about the nation's potential for growth. But he did acknowledge that economic growth has not been as robust as it could be, blaming Democrats for the 43-day government shutdown last year that he claimed shaved 2 percentage points of gross domestic product growth.

But the Bureau of Economic Analysis, in its recent release of the initial estimate of fourth-quarter real GDP growth, said Friday that the reduction in federal government services subtracted about one percentage point in the period.

Real GDP grew by 1.4% in the fourth quarter, compared with 4.4% growth in the third quarter. While the reduction in federal spending was a significant part of that slowdown, less consumer spending, fewer exports, and mixed business activity also curbed growth.

That said, Atlanta Fed's GDPNow forecasting model estimates that the U.S. economy will grow by 3.1% during the first quarter. RSM U.S. economist Joe Brusuelas writes that this may be realistic, estimating that GDP growth in the first quarter will land in the 3% to 3.5% range.

There's expected to be a rebound in government spending following the extended shutdown last fall that will add one to 1.5 percentage points to overall GDP growth.

That should help start the year off on solid economic footing.

Write to Megan Leonhardt at megan.leonhardt@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 25, 2026 10:51 ET (15:51 GMT)

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