US Inflation Rises to 3.7% as Midterm Elections Approach

The U.S. annual inflation rate accelerated to 3.7% in September 2026, an increase from 3.4% in August, primarily driven by rising energy costs[1]. This economic climate is a significant factor for voters leading up to the October 2026 midterm elections.

The rising cost of living, including energy and other consumer goods, directly impacts household budgets across the country. Public sentiment on the economy and affordability could influence the outcomes of the upcoming elections, making economic performance a central issue for voters.

What the Records Show

Gasoline and fuel oil prices accounted for more than half of the monthly increase in the Consumer Price Index (CPI) in September 2026, with airfares also seeing a notable rise[1]. The ongoing conflict in Iran is cited as a contributing factor to these soaring energy prices[1][3]. Despite these figures, President Trump has publicly dismissed concerns about affordability, calling them a “hoax” and a “fake word made up by the Democrats.” He asserted that prices were “rapidly going down” under his administration[1].

Meanwhile, the national debt surpassed $40 trillion during Trump’s second term, reaching $40.25 trillion by early October 2026[1][7]. Other reports indicated the national debt at $40.62 trillion as of October 2026[6].

Job Market's Mixed Signals

September 2026 saw a sharp slowdown in overall job growth, with nonfarm payrolls increasing by only 29,000 jobs, a figure significantly below expectations[1]. The unemployment rate concurrently rose to 4.2%[1]. In contrast, small businesses demonstrated more robust job creation, adding an estimated 28,000 net new jobs in September 2026[1]. Average hourly earnings for small business employees were up 4.0% year-over-year, and starting pay for new hires increased by 3.1%[1]. However, small business owners consistently identify inflation as their biggest challenge[1][11][12][13][14][15].

Public and Political Response

Public polls reflect widespread concern over living costs, with 96% of Republicans reportedly perceiving an affordability crisis[1]. An October 2026 Harris poll found that 61% of voters believe the U.S. is currently in a recession[1]. Among independent voters, 65% feel the economy has worsened, posing a challenge for Republicans in the midterms[1]. President Trump’s approval ratings in October 2026 ranged from 31% to 34%[1].

An October 2026 report by the Institute on Taxation and Economic Policy (ITEP) projects that Trump’s policies, including the “One Big Beautiful Bill Act,” will increase taxes and household costs for most Americans in 2026, while primarily benefiting the wealthiest 1%[1]. The White House has responded by stating that Trump’s policies are part of an “aggressive, pro-growth economic agenda” designed to deliver “tangible wins” and address affordability concerns[1].

What we could not confirm

The specific provisions and full details of the “One Big Beautiful Bill Act” that ITEP referenced could not be confirmed by the provided evidence. The methodology and sample size for the public poll indicating 96% of Republicans perceive an affordability crisis were not detailed in the available records.