Economists believe there remain many high prices to address, despite President Donald Trump’s claims that his administration is ending an affordability problem.
In his most recent attempts to reduce living expenses, President Donald Trump is focusing on the grocery shop as Americans confront increasing affordability issues.
Economists claim that food prices have a significant impact on customers’ moods and financial situation. However, the costs that are actually eating away at household budgets are not related to the supermarket: These include expenses for housing, healthcare, and insurance, all of which have put more strain on people’s finances in the last 12 months.
Speaking to McDonald’s (MCD) franchise owners on Monday, Trump highlighted reduced costs for necessities like bread and eggs. “My government is putting a stop to the affordability dilemma, which was initiated by the Biden administration. “Price reductions are huge,” Trump declared.
His remarks were the most recent in a renewed focus on affordability issues, which were a major factor in the 2024 presidential race and contributed to Democratic victories in elections on November 4, such as Zohran Mamdani’s triumphant mayoral campaign in New York City. With promises to freeze rent and cut the city’s exorbitant expenses, Mamdani sailed to victory. One of his proposals was to establish low-cost city-run grocery stores.
Trump has focused more attention on the cost of living since those Republican election defeats, most notably by removing tariffs on groceries like meat and bananas. Trump’s remarks followed trade agreements with a number of Latin American nations that included tariff reductions that would also ease pressure on the cost of commonplace items like coffee. Trump announced on Monday that the price of the beverage would also drop.
Oxford Economics researchers predicted Tuesday that the effective tariff rate will slightly decline to 12.8% between those tariff carve-outs and a U.S. trade agreement with Switzerland.
Nancy Vanden Houten, head U.S. economist at Oxford Economics, told BourseWatch that the cuts provide some assistance for consumers who are concerned about costs. The most recent trade agreements “grabbed a lot of headlines and maybe it results in some easing of prices at grocery stores, but it’s not going to turn around the broader affordability issues many households are facing.”
The current cost of purchasing and owning a property is shown in Exhibit A. The National Association of Realtors reports that in June, the median price of a home reached a record high of $435,300. According to Intercontinental Exchange, the percentage of monthly income required to service a mortgage on a home with an average price has been at or above 30% since the middle of 2022.
Trump has maintained that the cost of borrowing is excessively high, and homeowners have had to struggle with persistently high prices and mortgage rates ranging from 6% to 7% in recent years. Critics question his proposal to reduce monthly payments by taking out a 50-year mortgage.
Americans are also severely impacted by insurance expenses. According to data from the Intercontinental Exchange, the average cost of property insurance for homeowners increased by more than 11% over the previous 12 months. Over the previous five years, their costs have increased by more than 70%.
Only after spikes in 2023 and 2024 have increases in auto insurance costs slowed. According to a Cox Automotive and Moody’s Analytics index, the average price of a new automobile rose beyond $50,000 for the first time ever in September, and in October, the affordability of a new car declined for the third consecutive month.
See also: The average cost of a new car recently surpassed $50,000. How to shop for a loan so you don’t wind up underwater.
Health coverage is another area of demand. The majority of Americans obtain their health insurance through employer-sponsored plans, which are expected to suffer significant hikes in the upcoming year. If millions of people get health insurance through the Affordable Care Act marketplaces, their premiums may increase significantly in 2026.
Although there is only so much that can be done to “alleviate unaffordable home-buying circumstances,” or to help keep up with growing insurance premiums or power costs, Vanden Houten is anticipating “resilient” income growth in the future.
Indeed, there has been some respite for customers: During President Biden’s administration, inflation rates reached four-decade highs, reaching an annualized peak of 9% in June 2022. The year-over-year inflation rate was 3% in September, the most recent month for which data are available. Trump stated in his speech that he wants to further reduce inflation.
The cost of eggs has decreased by around half since the beginning of the year. According to the Bureau of Labor Statistics, the average price of a dozen eggs in September was $3.48, which was lower than the $6.22 price in March, when production costs and avian flu caused prices to exceed records.
Additionally, AAA reports that the average price of a gallon of gas on Wednesday was $3.09. That is far less than the $5.01 record set in June 2022 and is basically unchanged from a year ago.
According to Tim Quinlan, senior economist at Wells Fargo, political incumbents have been facing pressure from rising costs for a number of years.
Generally speaking, presidents have limited options for addressing rising living expenses. Biden promoted a $10,000 tax credit for homebuyers, efforts to eliminate “junk fees,” and other budget-friendly initiatives before to withdrawing from the 2024 presidential contest. Former Vice President Kamala Harris pledged to outlaw “price gouging” at supermarkets when she ran for president in 2024 as the Democratic candidate.
Quinlan suggested that the most recent Trump administration agreements would have more “politically impactful than practically impactful” effects on the bottom line. He pointed out that consumers are particularly sensitive to the prices they frequently see, such as those for food and petrol.
Quinlan stressed that it’s not because customers haven’t adjusted to rising food costs. “The money we spend at a grocery store looms much larger in our mind than that it does as a share of spending,” he stated.
According to him, a larger automobile loan may seem more manageable when it becomes a fixed, recurrent expense, while the pain of a greater health insurance premium may reduce when payment is set on auto-pay. However, a surprise at a higher cost “consumes your frustration in an environment of affordability,” according to Quinlan.
“Cleaning up Joe Biden’s inflation and economic disaster has been a top focus for President Trump since day one, when he signed an array of executive orders to unleash American energy and slash costly regulations,” Kush Desai, a spokesman for the White House
The Trump administration recently announced agreements with Novo Nordisk (NVO) and Eli Lilly (LLY), two pharmaceutical companies that produce the well-known but expensive GLP-1 weight-loss drugs. The agreements, according to Desai, will “unlock unprecedented healthcare savings for everyday Americans.”
As a whole, Desai stated that the government “will continue to implement and emphasize these and other economic policies that are cutting costs, raising real wages and securing trillions in investments to make and hire in America.”
Trump and Republicans in Congress have stated time and time again that the additional tax deductions and perks included in their One Big Beautiful Bill Act, which was passed in July, should result in lower tax bills and larger refunds. According to estimates by Piper Sandler, the IRS may reimburse up to $370 billion in individual income taxes on 2025 returns. The tax authorities had refunded $311.6 billion on 2024 returns as of mid-October.
Trump stated on Monday that he will continue to emphasize the cost of living. “I promise that I won’t stop working until every family and small business is stronger, wealthier, more prosperous, and happier. He replied, “Until you’ve experienced a bit of the American dream.”
According to MarketWatch research and interviews, the desire for a better life is now hampered by a lack of affordability.
According to Vanden Houten, Trump has a lot of work ahead of him when it comes to significant economic obstacles like housing and insurance expenses. “There’s not that much on the horizon in terms of these costs that suggest real relief is in sight,” she stated.
