For many people, the economy is a simple equation: paychecks minus expenses. When it feels like our incomes are growing faster than prices, the economy is in good shape. When they’re not, it’s lousy.
President Donald Trump seems to be making an alternative calculation.
Instead of focusing on the cost of living or affordability, which Trump has repeatedly labeled a “hoax,” the president prefers to tout the revenue the US Treasury is collecting from tariffs and business investment. He talks frequently about the vast sums of money America is bringing in, comparing his “hottest ever” economy favorably to the supposedly “dead” country under former President Joe Biden.
“We’re really taking in trillions of dollars if you think about it,” Trump said in the Oval Office Tuesday. “This is money pouring into our country on building car plants, on building AI plants. We just want to keep doing exactly what we’re doing because nothing like this has ever happened in the history of the world.”
Although increased revenue and investment certainly benefit the US economy, Trump and the Republican party face a budding political crisis because of affordability, not economic growth. The economy has been chugging along just fine, actually – perhaps to the surprise of millions of Americans who give the economy poor marks because of the high cost of living.
Growing revenue and business can help address affordability. But connecting those dots is tricky, and Trump’s “actually, we’re rich” messaging does not appear to be winning over the hearts and minds of fed-up consumers.
In this “windchill economy,” where Americans’ financial situations feel worse off than they really are, Trump is increasingly talking right past struggling Americans instead of speaking their language.
What Trump is saying
Trump likes to repeat two basic refrains about his economic policy.
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Tariffs and other initiatives are bringing in hundreds of billions of dollars in new revenue.
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Big businesses have committed trillions of dollars in new US investment.
“Let me tell you about the real economy,” Trump told Politico Tuesday in response to an affordability question. “We’ve got $18 trillion coming into our country. Biden had less than $1 trillion in four years.”
Trump’s math is hyperbolic, but tariff revenue is, in fact, up by more than $200 billion during Trump’s term compared to Biden’s. And dozens of companies and countries have pledged near- and long-term investments at Trump’s encouragement, with promises counted in the trillions of dollars.
Trump also announced a $1 million “Gold Card” visa that launched this week, which he has said will bring billions of dollars into the country. Commerce Secretary Howard Lutnick has said the new visas will raise up to $1 trillion for the US Treasury.
And Trump has spent billions of taxpayer dollars to invest government funds in businesses that his administration views as critical to national security. Because of stock market gains, Trump said those investments are already adding millions of dollars to the value of America’s investments.
“The price went through the roof,” Trump said Tuesday about his administration’s 10% stake in Intel (INTC). “I made $40 million dollars. Nobody talks about that.”
How Trump says his plan could work
The Trump administration’s theory is that actual and promised revenue increases could pay for the president’s oft-proposed $2,000 stimulus checks and the expensive tax cut passed earlier this year. Trump has also claimed that tariff revenue can fully replace Americans’ income tax burdens.
Eventually, the administration has said, tariffs can pay for America’s massive debt itself.
America last year paid $1.2 trillion to finance its own debt – which, at about $38 trillion, exceeds America’s overall economic output. Bringing in tax revenue to reduce the debt means we would need to pay less in interest and financing, which could, in turn, free up money for programs and benefits thatbhelp support affordability.
For example, Trump on Tuesday said tariff revenue paid for the $12 billion bailout his administration recently provided to farmers.
“We’ve taken in so much money with the tariffs now that it’s such a pleasure,” Trump said. “Without it, we wouldn’t be able to help you. We’re the richest country in the world now.”
Separately, Trump frequently talks about how the promised business investments could bring manufacturing and AI-related jobs to the United States. And tariffs could incentivize businesses to return overseas factories and outsourced workers to the United States.
“Car companies are moving back that left us years ago. AI is coming in at levels never seen before. Factories are opening up all over the country,” Trump told Politico. “Ultimately, you know what it reduces itself to? Jobs. You’re going to have jobs like you’ve never seen in the United States.”
The problem with Trump’s argument
The problems with Trump’s theory are simple: The math doesn’t add up, and any benefits those proposals would bring in the future won’t help Americans who are struggling with the cost of living now.
The Trump administration brought in around $200 billion in new tariff revenue this year. That’s not nothing, but in a $30 trillion economy, it’s a drop in the bucket. It isn’t enough to support $2,000 stimulus checks for every American household or eliminate income taxes. It certainly isn’t enough to pay down the $38 trillion debt.
The investment pledges, though welcome, are just pledges, with no mechanism to enforce them. Companies are notorious for appearing at high-profile ribbon-cuttings with presidents only to eventually back out of plans – like Foxconn did shortly after it announced a highly touted Wisconsin factory with Trump during his first term. And much of the companies’ accounting includes previous commitments.
Even if all of the pledges turned into real projects, factories are already struggling to hire qualified or willing workers. It’s not clear new factories will meaningfully restore manufacturing work, which was lost in large part to automation over the past several decades.
Meanwhile, tariffs are making affordability worse, not better. Federal Reserve Chair Jerome Powell on Wednesday said that Trump’s tariffs are solely responsible for prices growing faster than the Fed’s 2% long-term annual inflation target this year.
The windchill economy
The core political messaging problem in this economy is rooted in the “windchill” economy, where everything looks great on paper, but the lived experiences of millions of Americans who are struggling with their finances say otherwise.
Trump can correctly and truthfully speak about strong overall economic growth and consumer spending – but it won’t mean a thing to people if they feel like they can’t live within their means.
But Trump is making his job extra hard by doubling down on the policies that won’t make an immediate, meaningful difference for Americans’ wallets, while dismissing the windchill factor as a “con job” or a “scam.”
Trump is speaking like a business executive, where revenue growth is the source of profit and stability. That’s definitely important for America’s economy, too. But the economy is not a business. The economy is people – and many of them are hurting.