President Donald Trump’s’ economic advisors and congressional Democrats are sending similar messages.

The president’s aggressive policies—tall tariffs, tough immigration policies, and slashing the Affordable Care Act and Medicaid—squeeze working Americans by boosting inflation and slowing wage and jobs growth.

Grocery prices are soaring, and inflation for basic services—everything from fixing cars to Microsoft Office annual subscriptions—show little sign of slowing down.

Premiums for health insurance purchased on the ACA exchanges could double with the end of COVID-era subsidies.

Fewer foreign workers should mean better jobs and wages for key constituencies—young people and lower-income workers—who helped reelect Trump. But artificial intelligence agents that can perform ever more complex tasks are eating jobs.

Those new factory jobs that steep tariffs were supposed to create are yet to appear in significant numbers—manufacturing employment continues to fall.

From May to August, the economy added only 27,000 jobs per month—well below the 174,000 pace during President Biden’s final 15 months.

With the Bureau of Labor Statistics closed, economists sifted data from private sources like payroll company ADP and Revelio Labs. Those indicate that 32,000 jobs were added in September.

Wage growth has slowed, and the pay premium workers can gain by switching jobs is rapidly disappearing.

The president’s supporters can point to the AI-driven productivity surge that’s accelerating GDP growth but if your pay isn’t keeping up with basics like food and health care, you’re likely upset.

If you can’t find work in a stagnant job market, then you’re downright angry.

A September AP-NORC survey indicated 37% of voters approved of Trump’s handling of the economy, while 62% disapproved.

Trends among young voters who helped him regain the presidency appear particularly disquieting and contribute to the appeal of pop-socialists like Zohran Mamdani.

The number of 16 to 24 year-olds that are NEET (not employed, enrolled in school or a training program) has risen from 6.6% in mid-2023 to 10.5%.

Trump’s tariffs are premised on the notion that large numbers of manufacturing jobs that moved abroad were stolen from Americans by unfair trade.

That falls short in several dimensions.

As the ICE raid at a Georgia Hyundai complex laid bare, we can’t build the new factories without immigrant labor—we don’t have enough Americans with requisite skills.

Owing to robotics and other productivity advances like AI, the number of jobs created at new factories won’t be huge when set against the nearly 14 million Americans who are unemployed, in forced part-time status or too discouraged to actively seek work.

In Asia, the most populous and arguably vibrant countries, China, India and Indonesia, are sporting youth unemployment rates of 16.5%, 17.6% and 17.3%.

If they’re eating our lunch, it’s a thin cucumber sandwich.

The president’s advisors are telling him to focus Americans’ attention on next year when his tax cuts will more fully kick in and the benefits of deregulation and lower oil prices will gain more traction.

But AI’s veracious appetite for data centers is driving up electric bills.

The economy is already growing, and there isn’t much room for additional inflation-free fiscal stimulus—the budget deficit already exceeds 6% of GDP.

The Fed will likely lower interest rates further, but zoning and land use laws still limit home building around major cities.

It will continue to be a tale of two economies—AI’s winners and the rest of us.

Strong private investment boosted second quarter GDP growth to 3.8%, and information processing equipment, software and R&D were 72% of that business spending.

That will continue with the bold projects that Sam Altman’s ChatGPT, Meta, Elon Musk and others in the AI chase are financing with revenue, debt and booming stock prices.

Optimism is driving up technology stocks and creating stunning asset values.

At $500 billion, ChatGPT is worth about as much as Exxon Mobil. But its annual revenue is only $13 billion, whereas the oil giant’s is $350 billion.

That permits AI entrepreneurs to sell more shares and borrow from new investors. But it hinges on AI R&D delivering new agents to boost business productivity, and perhaps attaining Artificial General Intelligence.

The boom becomes a bubble if the pace of new applications disappoints, or if those don’t generate enough revenue, because low-tech companies like Walmart are learning how to create their own AI agents to bypass Silicon Valley.

For now, growth is narrowly focused on who gets the jobs, raises and prosperity.

Democrats, shutting down the government by demanding ransom to pass a budget, basically send the same let’s wait until next year message: pause spending cuts for health care and let the voters judge the economy in the 2026 midterm elections.
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Peter Morici is an economist and emeritus business professor at the University of Maryland, and a national columnist.