U.S. President Donald Trump attends a roundtable focused on tax cuts in Las Vegas, Nevada, U.S., April 16, 2026.
In recent years, there has been much discussion of the United States’ floundering wage growth, with the numbers slumping steadily since 2023. But April brought a brief if notable uptick in growth, increasing by .2 percent to a growth rate of 3.6 percent. While that’s not exactly skyrocketing, it could theoretically be viewed as a positive economic marker, were it not for the fact that inflation is “wiping out” the gains.
As Navy Federal Chief Economist Heather Long pointed out, in April, wage growth crept up to 3.6 percent, but inflation over the same period is projected to be 4 percent.
“Wages are being eaten up by inflation due to the war in Iran,” explained Long. “This is a big shift from the past several years when wages were growing well above inflation. Yes, workers have jobs, but this is a squeeze.”
After reaching a mid-pandemic high of around 9 percent, inflation plunged during the second half of President Joe Biden’s term. While the Federal Reserve hoped it would drop to 2 percent, inflation has remained around 3.5 percent over the past 18 months. Speaking in March, Fed Chair Jerome Powell explained that a “big chunk of that, between a half and three-quarters, is actually tariffs” applied during the second term of President Donald Trump. And that was before the gas price shocks and other economic disruptions caused by Trump’s decision to launch war with Iran.
"A year that was set to benefit from tail winds associated with a large tax cut and boom in artificial intelligence-led investment has been partially derailed by the impact of what as of today is an adverse and growing supply shock caused by the war in Iran," said economist Joe Brusuelas. "Unfortunately, war and the supply shock that ensued has altered the probable growth path this year."
The president has touted a rising stock market as a sign of economic success, but even those on Wall Street don’t share his optimism. As Moody’s chief economist Mark Zandi noted, "We'd likely be in a recession already if not for the AI investment-driven boom."
In other words, while a handful of traders may be benefitting from the AI stock bubble, the wider population is gripped with growing economic concerns. A recent poll found that 61 percent of Americans — including a majority of Republicans — feel the economy is getting worse. Inflation is overwhelmingly the country’s top concern, with jobs and the state of the economy coming in second. 69 percent of Americans disapprove of how Trump is handling inflation.
“This is the big Achilles Heel in the US economy,” said Long.