Trump keeps heralding an economic boom, but even a solid jobs report is causing problems for him

WASHINGTON (AP) — President Donald Trump has spent 20 months promising that America was on the cusp of an economic boom. But Friday's surprisingly positive jobs report ultimately provoked frustration from Trump.

The August job numbers might have been a welcome break from after months of sluggish hiring and concerns about inflation that have been weighing on Trump and his party two months from Election Day. But speaking from the Oval Office, Trump instead launched into a grievance session about inflation and interest rates. His anger was aimed at the financial markets, the Federal Reserve and U.S. trade partners. He objected to the commonly accepted notion in economics that the surprise gain of 162,000 jobs in August could contribute to inflationary pressures.

“Success does not cause inflation. Stupidity causes inflation,” Trump vented in the Oval Office, as he declared it “crazy” that the stock markets fell Friday on inflation concerns.

The combination over his second term of a drop-off in hiring and higher prices has dogged Trump and his pledge to instantly unleash historic levels of growth. “When I win the election, we will immediately begin a brand new Trump economic boom,” Trump said at an August 2024 rally in North Carolina. But so far, the economy has grown at roughly 2% annually, slower than the gains during the Biden administration.

Trump blamed his inability to deliver stronger growth on higher interest rates for U.S. government debt, saying on social media that America could retaliate by stopping trade with foreign countries. Rates have been climbing in response to persistently high inflation fueled by Trump’s tariffs and oil shortages from the Iran war. The national debt has now crossed the daunting threshold of $40 trillion and rates on the 10-year U.S. Treasury note on Friday rose to 4.79%.

As the promised growth has yet to materialize, the president has lost some of the public's trust in his ability to steer the world's largest economy. His own policies have enabled, in part, the inflation and high interest rates that he wishes to blame on others.

“The administration’s credibility on growth, inflation, rates, debt and deficit dynamics have taken a hit given the outsized predictions that are not aligned with economic reality,” said Joe Brusuelas, chief economist at the consultancy RSM US.

If the Fed did as Trump wanted and cut its benchmark rate so that more money could flow into the U.S. economy, the potential influx of cash could make inflation even worse and only add to his political and economic headaches.

But the president disputed this foundational concept in monetary policy. He said Friday that gross domestic product would grow at “12, 13, 14, 15%" if the rates were lower as he seemed to shrug off the inflation risks.

“We could have a GDP that would break every single record,” Trump said.

The president's approval rating on the economy was a lowly 32% in the middle of the summer, according to polling by The Associated Press-NORC Center for Public Affairs Research. When Republicans were last facing midterm voters in 2018 under Trump, his economic approval rating was 50%.

Trump's threat to cut off foreign trade could endanger growth, further hurting his ratings. His recent levying of tariffs against Canada have become problems for Republicans in the Maine and Michigan Senate races.

Trump officials say their policies are working as intended. They say the development of artificial intelligence will lead to more productivity to boost growth. They say that last year's tariffs should ultimately bring more factory work to America, while Trump's tax cuts will create more business investment and his administration's efforts to identify fraud will create savings for taxpayers.

“I expect higher growth," said Christopher Phelan, chairman of the White House Council of Economic Advisers. “We’re doing stuff to make good things happen.”

Phelan said recent job gains have been about two times larger than what's needed to match population growth. He considers it as entirely possible that productivity gains could push up overall growth for the next several years, even as he acknowledged that growth alone might not be enough to solve all of the country's financial challenges.

Because the costs of Social Security and Medicare are rising faster than revenues, growth alone is unlikely to meaningfully reduce budget deficits.

If U.S. economic growth could exceed 3% growth annually for the next decade, that would only be enough to stabilize the government's already high debt load, according to an analysis by Ernie Tedeschi, head of economic insights and research at Stripe, the financial technology company.

Tedeschi said he would be “thrilled” if AI could help to deliver those kinds of gains for 10 straight years, but history shows that growth that large due to advancements in computers were likely “wildly optimistic.”

“We should absolutely not be planning for the optimistic scenario," Tedeschi said.

Up until the president's comments about interest rates on Friday, the Trump administration has spent the past week trying to make voters feel more confident about the economy.

Treasury Secretary Scott Bessent specifically promoted the benefits of stronger growth at the G20 summit for finance ministers in North Carolina. Commerce Secretary Howard Lutnick did so as well as part of G20 meetings about innovation.

Still, Bessent told AP in an interview that he's also working with White House budget director Russ Vought to announce a plan to “bring down the level of the debt, deficit.”

There is political risk in trying to meaningfully reduce a year budget deficit of roughly $2 trillion that is slated to exceed $3 trillion a decade from now. Lowering the path of budget deficits would likely help with interest rates, but there could be political pain points in the form of spending cuts and tax hikes.

Brusuelas, the chief economist at RSM US, stressed that Trump would likely need to make sacrifices to meaningfully address the debt and reassure financial markets.

“We need a period of slower growth in government spending — that includes outright reduction in spending in addition to tax increases that all would reduce deficits and interest rates,” he said.

A gasoline station advertises its prices Thursday, Sept. 3, 2026, in Miami Beach, Fla. (AP Photo/Marta Lavandier)

The economy, inflation and how those forces could impact the lives of Americans were front and center over the past week. Trips to the grocery store and gas station are more painful than they were last year, and rising costs are impacting the decisions of both households and businesses.

Here’s a snapshot of prominent economic data and news that occurred over the past week and what it potentially means for you.

The U.S. job market rebounded in August as employers added a surprising 162,000 jobs, which far exceeded the 65,000 that economists had expected.

Two months before the midterm elections, President Donald Trump welcomed the strong hiring report Friday. “Great jobs number just announced, breaking all estimates (except mine!) by double and triple - And you haven’t seen anything yet!” he wrote in a social media post.

But inflation has dominated conversations this year in business and households. Voters are increasingly frustrated by higher costs, particularly fuel prices that have hit record levels since the U.S. and Israel attacked Iran in late February.

And meager pay raises have made rising prices more painful for many. Average hourly wages rose 3.1% last month from a year earlier, the weakest year-over-year increase since May 2021.

Employers posted slightly more job openings in July as the American labor market remained sturdy in the face of higher costs that are squeezing household budgets.

U.S. job openings ticked up to 7.27 million in July from a revised 7.18 million in June, the Labor Department reported Tuesday.

The department’s Job Openings and Labor Turnover Survey (JOLTS) also showed that layoffs fell. But so did the number of people quitting their jobs — a sign of confidence in their prospects.

The American job market is hardly booming, but it is ambling along despite an energy shock caused by the fighting with Iran that has squeezed family budgets.

Diesel hit a record price in the U.S., soaring to an average of $5.85 a gallon for the first time Friday as the six-month war with Iran disrupts the world’s flow of fuel. Holiday travelers will pay more than they every have over Labor Day weekend for gasoline, which remains well above $4 per gallon.

But it's not just holiday travelers likely to feel the pinch. Higher diesel prices mean higher transportation costs for a long list of essential goods. Some businesses have already passed on costs to consumers in the form of added fees on online orders and packages in the mail. Shoppers may experience more sticker shock has higher shipping costs trickle down to store shelves.

One of the most immediate strains is being felt in the grocery aisle, particularly with produce, meat and other perishable foods that need to be hauled in and restocked frequently.

Chipmaker Nvidia is buying artificial intelligence software platform Hugging Face for $13 billion.

In July, Hugging Face’s data processing systems were hacked, and ChatGPT maker OpenAI acknowledged that its artificial intelligence system was to blame, sending shock waves through the security community amid heightened concerns about the capabilities of powerful AI models.

Just over a week later, Anthropic said its artificial intelligence models hacked into three other organizations during testing. That was followed closely by an announcement from Meta, which said its AI model accessed the internet on its own and hacked another company.

Nvidia CEO Jensen Huang said that Hugging face will remain an open platform. He signaled that Nvidia is betting that more businesses will turn to open-source AI, which lets them download and customize their own AI models, rather than pay for proprietary AI services from companies such as OpenAI and Anthropic.

Mortgage rates rose again this week, driving the average long-term U.S. home loan rate to its highest level in more than a year.

The benchmark 30-year fixed rate mortgage rate rose to 6.71% from 6.66% last week, mortgage buyer Freddie Mac said Thursday. One year ago, the average rate was 6.50%.

Higher mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting homebuyers’ purchasing power. As rates rise, that can lead prospective home shoppers to delay buying a home, one reason U.S. home sales remain in a rut this year.

U.S. stocks mostly fell and Treasury bond yields rose to end the week after the monthly U.S. jobs report revealed a surprise burst in hiring in August that may free up the Federal Reserve to hike interest rates in its fight against inflation.

The tech sector relies on lax monetary policy for credit and any increase in the U.S. benchmark rate would make expansion more costly. Alphabet, Apple and Microsoft all pointed lower Friday.

The S&P 500, Dow Jones Industrial Average and the Nasdaq composite struggled to finish the week positive.

FILE - Jensen Huang, president and CEO of Nvidia, poses for a portrait before a groundbreaking ceremony for an expansion of Coherent's manufacturing facility on Tuesday, June 16, 2026, in Sherman, Texas. (AP Photo/Jeffrey McWhorter, File)